HUG Magazine 2018 EN - Issue 1. (№9)

2018

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HUNGARIA N G EOPOLITICS

A HUG (Hungarian Geopolitics) Magyarország vezető geopolitikai magazinja. A Pallas Athéne Innovációs és Geopolitikai Alapítvány (PAIGEO) a HUG magazinon keresztül teret kíván adni annak az értékteremtő diskurzusnak, amely felfedi korunk geopolitikai, geostratégiai és geoökonómiai hálózatait. Szerzőink nemzetközi szakértők, világhírű professzorok, új kutató generáció képviselői, akik arra a kihívásokkal teli feladatra vállalkoztak, hogy felkutassák és értelmezzék számunkra a világban szétszórt, mégis összetartozó tudásmorzsákat.

HUNGARIAN GEOPOLITICS

HUG 2018 1

2018 / I.

ISSN 2498-647X

New World Order Strategic Planning Multipolar World The Geopolitical Signicance of One Belt, One Road 16 + 1 cooperation Global Cities Networks and Knowledge Tech-tonical Shift PAIGEO stories

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FOREWORD

Dear Readers We launched the HUG (Hungarian Geopolitics) Magazine in March 2016. Besides professionalism, this quarterly specialized magazine aims to make geopolitical thinking more popular. It is our stated intention that we bring geopolitics into public life. One of the most significant online newspapers said that the 21st century brings the breakthrough of geopolitics.

We could not guess then that the changes taken place in the previous years had meant the emergence of a new global world order with new actors, new values and new cooperation. In this multipolar world order 3 great powers: the United States, Russia and China are the key actors.

We can also agree that the changes of the 21st century have enhanced the geographical processes, and geography has stepped up again. Globalization has entered into a new phase, where monetary policy, economic policy and geopolitics have entirely interconnected in successful countries. The role of geopolitical games has been taken over by the game of geo-economic strategies, where the actors compete for the closed markets. In the age of fusions and networks interconnectivity and complexity has an increasing role, and besides nations it is the global cities that grow into the power centers of the 21st century.

In two years’ time the HUG has become Hungary’s leading geopolitical magazine. Besides our Hungarian and English issues, we published the first Chineselanguage issue in November 2017. Several thousand readers read our issues in more than 130 countries.

The HUG aims to introduce the audience to our rapidly changing world, the importance of the geopolitical attitude, the impact of new technologies on over daily life and the rise of Asia in a highly professional but easy-to-read form. Our authors are Hungarian and international experts, world-famous professors and representatives of the new generation of researchers, who are all dedicated to collect and present the information crumbs dispersed all around the world.

This issue of the HUG is a special edition collecting the most interesting articles of the past two years built upon six special themes. The first theme covers the thoughts of geopolitical-geo-strategic thinkers and leaders about the new world order. The second theme outlines the relationship between the One Belt, One Road initiative and Central and eastern Europe. The third theme is the future of global cities and creative cities in terms of liveability. The fourth theme discusses creativity, education and creative society, which may result in a new type of planning. The fifth theme investigates the technological boom and answer the questions how the technology changes our everyday life and what the great paradigm shift means. Finally, the last theme presents the events sponsored by Pallas Athéne Innovation and Geopolitical Foundation and their results. Some of the articles might be familiar to you from our earlier issue, but they become even more interesting and interconnected in a new environment and theme.

Thank you for reading our magazine. I wish you good reading and discovering the map of the 21st century in the future, too.

Kindest regards,

Norbert Csizmadia Pallas Athéne Innovation and Geopolitical Foundation President Editor-in-Chief of the HUG

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TABLE OF CONTENTS 10

Parag Khanna: Connectography

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Sugata Mitra: The revolution of education

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Noah Raford: Strategic planning

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Tech-tonic shift

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The great degeneration in brief: European and Hungarian perspectives

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Technological visions – 2050

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A multipolar world order has opportunities to offer

Ricardo Hausmann: The growth and diffusion of knowhow

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Brexit – A milestone in the new thirty years’ war

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Curating a digital repository with the editor of Wired magazine

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Geofusion

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A Hungarian compass between East and West

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Mihály Csíkszentmihályi: How can we become a creative society?

The Geopolitical Significance of One Belt, One Road from a Historical Perspective An introduction to the “16 + 1 cooperation”

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The Budapest Guidelines

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Global cities redefined

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Future of cities

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Richard Florida: Creativity is the basis of the future

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Control, cell biology and success

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Pallas Athene Geopolitical Doctrines

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The European Forum for Belt and Road Cooperation Conference

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The New World Order conference

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Geography, economy, strategy

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Strategy and geography in understanding the New Silk Road

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HUG – Hungarian Geopolitics

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Pallas Athene Books

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The Chinese Mind

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The Sun and a new theory of life: The Helios theory 7

New world order

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PARAG KHANNA: CONNECTOGRAPHY

Parag Khanna’s lecture at Corvinus University of Budapest

Parag Khanna’s lecture at Corvinus University of Budapest on 16th March, 2017, as part of the PAGEO Geolectures series

We were discussing earlier who are the voices in geopolitics that we read and are learning from: from the new generation, from our generation, from, hopefully, your generation, because there are not enough new approaches to geopolitics; people think of it in many ways as just studying history. But it’s not; it is as dynamic, and as changing, as fluid as ever in history. So, I hope to contribute to encouraging you to stay with this field and to develop it, to put the ideas into practice. Let me begin by presenting some of the major ideas that relate to this idea of Connectography. Connectography is not a world you will find in the dictionary, maybe next year, but not last year, because I invented it. I did so precisely because I think that the younger generation has to have a new approach in which geography is not thought of as a static thing. When we think of geography, we think of forces that are immovable: continents, oceans, we think of time in this geological scale. And those changes therefore, again, are very long-term and driven by the past. Today the world I think is changing very-very rapidly, so I want to show you some of the maps and images that convey that line of reasoning.

The first is a map of the world infrastructure networks. This is all of the world’s transportation networks, like highways and railways, and bridges and tunnels and so forth. It’s also all of the energy systems, the oil and gas pipelines, the electricity grid.

And I’s also the communications systems, the internet cables and so forth. If you take these three layers of infrastructure, these are the physical embodiments of connectivity. To connect from one place to another place, from one person to another person requires some physical infrastructure. But most of our maps don’t show us that. Most of our maps just show us countries and borders. They show us dividing

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“it requires us to rethink our maps” lines, they don’t show us connecting lines. But these lines are real. They are more real than most borders are. Most borders are actually invisible, whereas these lines are real, physical, tangible lines that we built: your government built them, all the governments in the world, all the companies in the world built these lines. And they are used to connect us but most of our maps only show us the lines that divide us. I think it’s not just an intellectual mistake, it’s not just a normative mistake; it’s an actual physical mistake. If you map over time, especially the last one hundred years, fifty years, just the last twenty-five years, there has been enormous acceleration of the building of this connective infrastructure. I believe it is literally re-organising human society. We think of human society as being inherently divided into nations and boundaries, and the basic unit of the world is the national unit. I believe that in this world that we are moving into the natural unit, the most effective unit, the most important unit will not be the bordered country but he connected city. And that is coming about as a result of all of this investment in connectivity across our geography, and it is that fusion of connectivity and geography that gives us connectography. It is, in my opinion, the most powerful, the most revolutionary force in the world today. Again, it requires us to rethink our maps. We are traditionally accustomed to see maps of natural geography and maps of political geography. In the classrooms of this university, I bet that most of the maps are like this. And sometimes your maps are like this. Have you ever had a map like this, in your classroom? No. That’s the problem. I am on a mission that I want every map in the world replaced with maps

of connectivity rather than maps of division. Or, to be more fair, I believe that if you want to properly understand the world of the 21st century, you cannot look only at this (political) map: this only tells you the legal relationship between two countries, and the size of that country. That’s it. It does not tell you how the world works.

If you look at a topographical map, it just shows you nature. It doesn’t show you how we use nature. And if you look at only infrastructure, it just shows you what we’ve built but it doesn’t show you what impact it’s having on the rest of the world. So, I believe that in the 21st century you have to learn all three kinds of geography: natural geography, political geography and functional geography, if you want to properly understand what’s happening.

There is another kind of map that I think is much useful for understanding the 21st-century world than our traditional maps. This is a map that captures a few different things of the same time. The first is demographics. Tell me: do you have a map in your classrooms that shows you where all of the people in the world are? No. Do you think it’s important to know where the people are? Yes! So, this is a map

that actually shows you something very useful, because every one of you is on this map as a pixel.

There are eight billion pixels on this map, and every one of you is one of those pixels. So now, for the first time, you can actually see where the people are. And it tells you some very important things. The most important thing about how we organize ourselves in the world is not whether you live in a country with natural boundaries and a sense of national identity.

The most important thing for all people in the world is to live near water. Because that’s what we always did. For sixty thousand years, the most important thing is that we, humans need to be near water. We don’t have to live in countries, we don’t have to have national sovereignty in boundaries, we don’t have to have armies, but we need water. Most of the world lives near bodies of water: oceans, rivers, lakes and so forth. The other thing that’s very important is to see that most of the world population lives now in Asia, not the Western world. We’ve been accustomed to thinking of the world is being dominated

by Europe, by the United States. But for the rest of your lives, the next hundred years, the world population will peak and it will probably reach maximum ten billion people. So, one day, in the year 2040 or 2045, you will all open the newspaper and on the

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parag khanna: CONNECTOGRAPHY

“in the 21st century you have to learn three kinds of geography: natural geography, political geography and functional geography, if you want to properly understand what’s happening.”

front page there will be an article and it will say: ‘the wold population has peaked, and now it will begin to decline.’ But even as it declines, most of the world’s people will be here, in Asia.

I didn’t put borders on these particular maps, instead what I’ve put are these ovals. On your political maps, your normal map, you just see every city as a dot of the same size. Budapest is one dot, Mexico City is one dot, New York is one dot, London is one dot, and all of the dots are the same size. in the real world. Cities are not of all the same size. Some cities have tens of millions of people. In the Pearl River delta in Southern China, there is a cluster of cities together. It starts in Guangzhou and goes down to Hong Kong. It’s one integrated region, there are trains and highways, it is very-very dense and connected. By 2025-2030, the population of that cluster will be about eighty million people. What’s the population of Germany, the largest country in Europe? Eighty million people. Then, the economy of just that area will be about 2 trillion dollars, which is the economy of all of India with more than one billion people. So, what matters in this world?

Is it just how big your country is, how many people you have? Or, is it how dense is your city, how much

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economic activity is in your city, what is the skillset of the people in your city, how connected is your city? What matters more? The truth is that it is the degree of connectivity, the kind of density, the quality of the economy that matters a lot more in the real world, in today’s world than just being big.

Congo is big, is Congo important? Sudan is big, is Sudan important? No. These other factors matter a lot more. So, there are about fifty of these urban clusters that are more important than other ones.

They are the places with the most people, the most economic activity, the real hubs for entire regions.

Again, you can see that most of the world’s megacities are in this Asian space, particularly in China, in India, in Southeast Asia. Now, one time I showed this map in Australia and people said, ‘Oh, no! Where are we, where’s Australia?’.

did the Soviet Union think? How do empires think historically?’ You would say, ’they want to grow bigger. They want to conquer their neighbours. They want more territory. They want more resources.’ But cities think differently. if you ask the mayor of New York, the mayor of London, of Dubai or any other city, the mayor of Budapest what do they want, they say, ’I need more connectivity. I need more flights

to connect from here.’ Then, they are saying, ’We need our stock market to merge and to connect to other countries’ stock markets and to get more investment. We need more railways to connect so we can export all the cars that we make in this country.’ In traditional geopolitics, a country says, ’I want to expand, I want to conquer’. In the view of the world where cities are making big decisions that shape national policy they are saying, ‘We don’t want territory just for the sake of territory; we want connectivity to enhance our economic position, to bring in money, to bring in education, to bring in opportunities and so forth.’ The future is really an inter-urban civilisation. So, geopolitics looks very different. The conflict in the 21 st century is much less about territory. There are still obviously wars of territory. You have a neighbour called Ukraine so I am sure you know that territory still matters.

But how many wars, international conflicts are there right now in the world today? Just a couple, and those matter but that does not tell you everything about how the world works. But what is happening every day, every week, every month, 365 days a year, is that countries are competing and cities are competing for connectivity. That’s what matters every

I said, ’Don’t worry. It is not a bad thing if you are not a megacity of fifty million people.’ But Sydney is one of the most important economic hubs in the world anyway. So, it’s not just about size, it’s about density, connectivity and activity. This is about fifty of the most important economic centres of gravity in the world. If you think about traditional geopolitics, and if I ask you ’How does a country think? How

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parag khanna: CONNECTOGRAPHY

created by America, and the purpose of this agreement was to isolate China. Instead, three years later, America did not show up and China showed up. So, did America win? Obviously not. you only win in this world if you are connected. The most connected power wins, not the one that does not show up. You can’t isolate anyone anymore. You can only influence by being connected.

There is another negotiation called the Regional Comprehensive Economic partnership – that’s a lot of Asian countries that are getting together. America thought that it could convince some countries to join the TPP, America’s agreement and exclude China.

But in fact, all of these countries are simultaneously negotiating with China in this other partnership.

What’s the moral of the story? Smart countries, like Australia, Singapore, New Zealand, Thailand, always play both sides, never pick just one side, in a world where being more connected is how you win.

single day. You don’t have to worry every day that your country will be conquered. You have to worry every single day that a city nearby or the country next door is going to lower its tax rate, it is going to steal jobs and supply chains, that manufacturing will shift over there, that investment will move over there. That’s what countries have to worry about every single day. And that is war – it is not military war, but it is economic war. I call it tug-of-war. It’s a tug-of-war to control global supply chains and value chains because if you control global supply chains, if you are the centre for the production of oil and gas, if you are the centre for manufacturing, if you are the entre for the development of digital goods and software, then you are powerful, then you are rich. If

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you look at some of the trade negotiations that are going on, you may have been hearing that the TransPacific Partnership between western hemisphere, between the United States and Canada, and Asian countries, that fell apart because Donald Trump said he does not want the USA to be part of the Trans-Pacific Partnership. But what happened was that yesterday and today, in Chile, in Santiago, all of these trade ministers got together. All of these countries that were part of that negotiation got together in Chile, but America didn’t come. Instead, China came. America said, we don’t want to be connected in this trade agreement anymore, and China said, ‘Oh, America is not coming? We will go.’ So, there is the irony: this was an agreement that was

Now let’s go back to Asia. What’s been happening in the last 25 years-27, since the collapse of the Soviet Union, all of this space is getting more and more connected. Hungary joined the European Union in 2004, but ever since 1989 Europe, the European Union has been gradually expanding from West to East. You receive structural funds and investments from Brussels, you have been modernising your infrastructure.

All of the countries, Romania, Bulgaria, the Balkan countries, the Baltic countries are all joining or joined the EU, all are modernising their economies, all are becoming members of the European Union, and now there are better railways connecting from West to East, all the way to Turkey. For the last 25 years, China has been doing the same thing going, not from West to East, but from east to West. The interesting thing is that China has more neighbours than any other country in the world: China has fourteen neighbours.

That’s a lot of neighbours; that’s a lot of potential conflicts. Any country you share your border with potentially you could have a conflict with. So, China has a very-very powerful military but it does not want to fight wars with all of its neighbours – otherwise it would have done that by now. Instead, what it’s doing is doing the same thing as Europe has been doing: it’s building infrastructure.

It’s doing that because instead of fighting war with them, it wants to control their supply chains: it wants to import raw materials: gas from Myanmar, resources

from Pakistan and from the Middle East through Pakistan, there are pipelines through Turkmenistan and Kazakhstan to the Caspian Sea through China and of course through Russia – oil and gas deals, fixing the Russian railways. China is investing in all of these things with all of its neighbours so that they can not only import raw materials and commodities from the Middle East but also so they can export more rapidly to Europe. Couple of years ago China announced the creation of the Asian Infrastructure Investment Bank (AIIB). At the time, the United States under Barack Obama did not like this institution. They said it is a very bad idea, it will undermine the World Bank, it will not follow world standards, this is a sort of geopolitical plot. The Obama administration called up all of the leaders of the European countries and urged them not to join that Chinese bank.

The European countries, however, joined the AIIB. There are 70 members now in two years that quickly joined this Chinese bank, because the purpose of this bank is to connect Europe and Asia. This is the world’s largest landmass. Most of the world’s population lives on Eurasia. Of course, you want it to get more connected. That is how you will maximise the opportunity of growing economic relations across this space. The countries of South Asia are poor and underdeveloped, post-colonial countries. The countries of Central Asia and of the Caucasus are poor former Soviet republics. All of them want this infrastructure.

Why would they not join a bank that’s going to finance all this infrastructure? Of course, they will.

But it is also a geopolitical plot; this is how China shapes and even dominates some countries without having to use any tanks, warplanes, or bombs. Instead, it sends tractors, cranes and trains. It doesn’t send troops – it sends construction workers. And step by step, month by month, project by project – electricity grid, hydro-canal, dam, highway, bridge – and one by one, it shapes these countries’ supply chains.

It doesn’t change the government; it doesn’t invade them in the way as America invaded Iraq. It just reshapes their supply chains and economies, and uses them as a passageway to export everything that it’s producing more efficiently to Europe. And that is ultimately mutually beneficial.

Right now, there is a lot of talk about protectionism. The Trump administration wants to put up walls, physical walls, raise tariffs, introduce border

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adjustment taxes, taxing imports coming into the country. Some people believe that this is going to be very bad for globalisation, globalisation could reverse, there could be trade wars, and so forth. I want to show you the data that contradict that because that is a false analysis. The truth is that because of all of this connectivity between all of the continents of the world, every part of the word is getting so much more connected, physically connected; and then there are new trade agreements, new institutions enabling and facilitating the flow of goods, the flow of people, the flow of money, the flow of data.

Entirely new patterns of trade are developing, where the United States is not at the centre; in fact, China is already the No. 1 trading partner of 124 countries. For 52 countries in the world, the United States is the top trading partner. So, no matter what Trump does, how will it undermine or change the ways all these other countries are trading with each other? It won’t. If he raises taxes, so that one country’s exports to America will slow down, those countries will export to other countries. And you can see that’s exactly what’s happening. The United States and Europe actually trade across the Atlantic Ocean 1 trillion dollars per year.

Now, for many-many years, the United States and Europe have been in the tightest and largest trade relationship in the world. But now let’s look at what’s happening across these Silk Roads across Eurasia, in Europe and Asia. The EU-China trade is 400 billion US dollars per year, the EU-ASEAN trade is about 200 billion US dollars a year, the EU-Japan trade is 150 billion dollars a year, the EU-India trade is 100 billion dollars a year… I left out Australia, South Korea, but if you add it up Europe’s trade with Asia is about 1 trillion dollars a year – probably more. And that is before all of these Silk Roads are even built, before Europe is really well-connected to Asia and before Europe has any free-trade agreement. It’s with good reason that Hungary is very enthusiastic about connectivity, about getting on the Silk Roads, about having the transportation corridors built to Hamburg, to Piraeus Port in Athens, in Greece, eastward across the Black Sea, and so forth. The more connected your country is the more you’ll be part of these flows. And the

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way to succeed, the way to become wealthy is to be more and more connected. And the same thing is happening with every other part of the world. Africa and South America did not use to have a lot of trade – now they do. Asia and Africa used to have very little trade – now just China and Africa alone have a trade of 400 billion dollars. Asia trades more with Africa than the USA does, and maybe in ten years‘ time Asia will trade more with Africa than even Europe does.

Who knows? Because they have complementarities.

Africa has resources, Asia is building lots of things and has billions of people that are consuming them.

Geopolitics is driven by these complementarities. If you come from my generation you are taught that geopolitics and alliances are these bonds between countries that are shaped by values, by Western values, certain civilizational values. And that is partially true. Alliances and geopolitics are not the same: alliances are actors within geopolitics. But at a deeper level geopolitics is shaped by complementarity: who has supply and who has demand? And that is what’s changing the entire world in this multipolar direction.

I want to talk a little bit more about the role of China because the way this country has become a superpower is through this connectivity. China has not always been a superpower, much of China is still very poor. 40-50 years ago, was a very-very poor, peasant society in the grips of the cultural revolution, “the great leap forward”. Only in 1979 they started to establish these little special economic zones for trade to attract investment so they could start to manufacture things. The first one was Shenzhen in 1979. we’re coming upon the 40th anniversary of Shenzhen, and that is exactly those forty years that China went from becoming a poor and backwards peasant society to being a superpower and the world’s largest economy. How did it do it? Did it do it because it built ten thousand nuclear weapons? No. Did it do it by building fifteen aircraft carriers that are sailing around the world and patrolling the oceans?

No, because China only has one aircraft carrier, they just bought it a couple of years ago. So, that’s not how China became a superpower. China became a

“The more connected your country is the more you’ll be part of these flows.

And the way to succeed, the way to become wealthy is to be more and more connected.”

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parag khanna: CONNECTOGRAPHY

demand. There are three chokepoints in the world of shipping, three areas where if there is a blockage, a terrorist attack, a war or closure then goods would stop flowing. That is the Suez Canal in Egypt, the Straits of Hormuz between Iran and the UAE, and the Straits of Malacca, just between Singapore and Indonesia.

We’ve always feared in geopolitics that if there is again any disruption here, in these three, there will be conflict. But in the world of total connectivity that means is if there is a disruption here, what about just going over the Arctic routes? Because of the climate change now the shipping lanes are open over the

superpower because in 1979 it created a little special economic zone called Shenzhen and then created more and more of them.

And then more companies started to invest there, and eventually, instead of having to import everything they started exporting lots of things. And suddenly, people started to say in the 1980s, the 1990s, that China is the world’s factory floor, they are making everything. And now everyone has a trade deficit with China, they have a surplus. China took those trade surpluses every year and started saving it in their currency reserves. They built four trillion dollars’ worth of currency reserves and now start to export that money, and use that money to build infrastructure for other countries, to build highways, railways and pipelines to feed the economy. They invest in Britain, Germany, France, Portugal, Italy, Luxembourg, Hungary. One of the biggest beneficiaries is Germany because Germany has one of the most high-tech economies in the world. China’s started out low-tech, with toys and mechanical things that break after five minutes, but now China’s doing semi-conductors, Huawei phones, solar panels, wind turbines, high-speed railways, aeroplanes, the world’s fastest computers, the largest volume of gene sequencing machines. They are getting rid of the low-end stuff, they are giving it to Bangladesh, Indonesia, Africa, and they try to keep the high-end stuff. What do you do if you have four trillion dollars and you want to control the expensive, lucrative value chains, if you want to compete with Apple, if

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you want to compete with Siemens? You have to start buying German companies. And so, starting in 2014, 2015, China said, ‘let’s start spending money in the most sophisticated economy of the world, in Germany.

All of that is about moving up the value chain. What odes a country want? Does it want to conquer its neighbours or does it want to be a sophisticated economy with wealthy and productive people? I think what most countries want is the latter. Most of the world’s border disputes are actually settled.

It’s really about moving up the value chain and using industrial policy and investment leverage to move up the value chain.

This world is becoming so thoroughly connected infrastructurally, but that doesn’t mean that geopolitics is going away. Infrastructure corridors can be the pathways for conquest. If you want to control the supply chain, sometimes you have to go in and to stabilise that supply chain. So, in all of these places where China has these big investments maybe one day, maybe already, there are Chinese troops there.

And of course, China is so well-connected physically to all of these countries now. This is not necessarily an argument about connectivity leading to peace.

Connectivity can be the pathway for conquest. But in some ways connectivity creates a world that I think is a much better world, a more resilient world. And that is because you have multiple pathways for the supply of something to reach the market, for supply to meet

Arctic for an increasing number of days every year.

And it’s faster to ship goods from Hamburg and Rotterdam over the Arctic through the Behring Strait to Asia than to go through the Mediterranean. Or, what about going overland through the Silk Roads if you are shipping cars, goods and other things. So, giving you another specific example: ten years ago, there were lot of concerns that the United States and China would fight a war to control the oil of the Middle East. But ever since that time, two things have happened: no.1 is that America has discovered shale gas and shale oil, so America has become the largest oil and gas producer in the whole world. And in fact, it exports oil and gas to Europe and exactly one year ago America started exporting oil to China. Instead of fighting, America is just selling oil to China. Isn’t that a better solution? No war for oil. In geopolitics, we are always concerned about war over resources, but there is no reason of a war over oil when you just sell it. So why fight when you can trade? So, I think that connectivity is a source of resilience.

In the end, you come up with not a map but maybe a diagram of world power, of world relationships. If you put together all of the factors I have been talking about, it looks like this. First of all, every region of the world, every continent in the world matters.

We didn’t always live in that kind of world. Think about the European colonial era: the world was hierarchical, Europe controlled everything. Some parts of the world didn’t matter at all for decades and decades. Today, it’s different: every region is participating in this network. And that’s the second thing: not only is every part of the world important, every part of the world is connected to every part of the world. There is no power at the centre. In the 1990s, we asked ourselves, ‘now, that the Soviet Union is gone, America is the only superpower, what system will come next?’ I think this is what the future

is already starting to look like. Every continent matters, every region matters. In each region, some countries are matter more than others. America is not at the centre, it can’t dictate everything, but it’s certainly the most important power in North America and it has very strong linkages to other regions.

But all the other regions also have strong linkages to each other. So, the world doesn’t look like a pyramid – one power at the top, everyone else below; it looks like a spider web, a network structure because every region matters, every region is negotiating and making its own deals with every other region.

At that means actually a very stable structure. A lot of times in geopolitics people find it simpler: it’s just easier if there is one number one.

“But the world is not simple, the world is very complicated, very complex.”

But the world is not simple, the world is very complicated, very complex. The world will not be so simple.

The world becomes more complex and we have to appreciate that, we have to appreciate that connectivity, regionalism, and these other forces that are really shaping the world much more than our traditional geopolitical theories that are built primarily on just territory, size and military power. I think this a more stable world because I described it earlier as a spider web: there is actually stability to that structure. This is the way the world is becoming. No matter what some countries do or don’t do because it is connectivity that’s making the world this way and connectivity is that revolutionary force that we all want, we all crave, we, as people, cities and countries, regions – everybody wants connectivity. The more you invest in connectivity the more you inevitably build the world that looks like this. So often in the day-to-day headlines we worry about that one event, that one black swan, that one Brexit, that one election of Donald Trump as if it’s going to throw globalisation in reverse, make globalisation stop, be a spark that cause World War III. I don’t think that it is that actually going to happen. There will be lots of tension in the world, there will be lots of conflict, there will be lots of struggle to control resources, economic power and so forth. But it is a very different kind from previous generations and connectivity is the reason why it is so much more complex, but ultimately also so much more stable.

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NOAH RAFORD: STRATEGIC PLANNING Noah Raford gave a presentation in Budapest at the invitation of PAGEO

Maps are the cornerstones of our society and the symbols of how we see ourselves and our place in the world, because they help us plan and achieve our goals.

photo: Hajnal András

NOAH RAFORD, CROWDSOURCING AND START-UP GURU, ADVISER-EXPERT

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A technology adviser; the expert of an automated work organisation process known as crowdsourcing; a start-up guru; a senior adviser on innovation and strategy holding several positions within the government of the United Arab Emirates; cofounder and chief executive officer of futurescaper.com, registered in London and Dubai; and co-author of the book Warlords,Inc.: Black Markets, Broken States and the Rise of the Warlord Entrepreneur. Raford’s name is also associated with the “Drones for Good” Award, introduced in the United Arab Emirates, urging the utilisation of drones in the development of support and public service systems, as well as the establishment of the International Council of Artificial Intelligence

and Robotics and the Museum of the Future.

He obtained his doctorate at the Massachusetts Institute of Technology, his master’s degree at Bartlett School of Architecture and a multidisciplinary university diploma at Brown University.

He has worked as director of the North American Region of Space Syntax Limited, an advisory company; as a scientific collaborator of the London School of Economics; as an assistant professor at the University College of London; and as a member of staff at the International Future Forum. He is also a partially retired techno-DJ, who occasionally runs the Nerd House podcast broadcast and writes a blog about 21 st-century strategies and design.

Today, I would like to talk about what I call Future Without Maps. How do maps relate to design and strategy and to the future of our changing world? Maps are the cornerstones of our society. They are symbols of how we see ourselves and our place in the world, because they help us plan and achieve our goals. Maps have a special power. The heliocentric map shows the Earth revolving around the Sun and not on the other way round. These days, it seems a simple fact, and therefore it is easy to forget that the acceptance of this theory cost thousands of lives and took hundreds of years. Maps are not only symbols of who we are and the world we live in, but are also powerful tools.

We make a route for our selected target. Or we prepare a road map to achieve our target. If an individual embarks on a new business, we prepare a business map. Companies prepare technological world maps to outline the plan of their investments. Countries, nations and banks form strategies to achieve their goals. The English word “map” means a noun referring to a map or a diagram, and also a process for how we achieve our goals.

It is no exaggeration to say that maps and a road map are fundamental aspects of almost all strategic plans.

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NOAH RAFORD: STRATEGIC PLANNING

“What can we do without a map? This will be the fundamental issue of the 21st century.”

We are taught to first analyse the world around us and then to make a map – either literally or in an abstract sense – then define where we are and where we would like to be in the future. We need to define our goals and plans, and once we have come up with an idea, we should invent different routes and tools to achieve it. What is the simplest route? How to assess the options? Once we have found a strategic opportunity, we should use our resources for implementation. The right order is: analysis, planning and implementation.

WILL THE CHANGING WORLD DESTROY THE MAP? The most important question is: What to do without a map? This will be the fundamental question for the 21st century, because I think that the age of maps and map-based planning is over. What can we do if we do not have exact maps, and when the world around us changes so fast that we are unable to capture the changes on the map? What can we do when the information read from the map creates uncertainty, even if otherwise we would find our way on the map?

DUBAI AND CHINA HAVE MADE IT Dubai has the busiest airport in the world. Each year more than 70 million people use it. The shopping centre of the airport is the busiest tourist attraction in the world. This site is visited by more people than the total population of France.

This is because Dubai is at the intersection of the developing East, Africa and the Western world.

The largest IPO of the world, Alibaba, comes from China. Alibaba alone provides all the services that are provided by Western companies.

Consequently, this single company does everything that is otherwise performed by PayPal, Amazon, Google, JCPenney, Dropbox, GROUPON, WhatsApp, e-Bay, Orbitz, Kaplan, Twitter, Spotify, Hulu and ING. It is one company.

If, therefore, it is difficult to create a map and it is impossible to create an exact map, how can we make an effective plan? And what can we expect if we are unable to make an effective plan?

I do not think that anybody need be convinced of the fact that the world is changing. The most important aspects of our lives go through dynamic, unprecedented structural changes. The changes affect politics, government, economy, technology, climate, demography and society, even our own family and social interests. There is pressure on all important aspects of our life to obtain new experience in some new way.

Interestingly, the greatest pressure and changes are driven from inside. Are you a banker? How does climate change affect the banking system? Are you engaged in technology? How are your main products affected by the political sets of values of your customers? Consequently, the change is not only dramatic, but so complex that it is almost impossible to track the process.

IMPROVISATION AND CREATIVITY INSTEAD OF MAPS AND PLANS Naturally, history goes back to technology. As if in a sci-fi, we come across technology breakthroughs each week. As an example, in the past driverless cars existed only in our fantasy, but by now they have run more than a million hours. The latest Tesla model also has a driverless function. Within the next few years, cars will be fully automated, transforming urban traffic and transportation. In my opinion, it is only the tip of the iceberg. Automated mechanisms, robots and software intelligence will transform the majority of the economy. Apart from a few employees, the Amazon warehouse is fully controlled by robots.

According to a study published recently by the University of Oxford, 50 per cent of the jobs in the United States may be automated within the next ten years.

A number of jobs – such as lawyers, retail salesmen, tax advisers and financial advisers – are likely to be replaced at a rate of 85-90%. This is not even close to what we have already achieved in biology and synthetic biology. Earlier this month, Chinese gene researchers announced that they had successfully modified human embryos. This was the first occasion published, and I can say without any exaggeration that the same process has been under development in China for three-four years.

Dubai 22

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NOAH RAFORD: STRATEGIC PLANNING

This problem raises issues in the education system, labour market training and the allocation of internal funds within society. I have two small children, and when they ask me what they should be studying at school, I find it very difficult to respond, because I do not know where the world or the labour market will be in ten or fifteen years’ time when my children will get there.

fundamentally that the dynamism of the system has become absolutely chaotic.

There is no fundamental mathematical probability.

The situation is the same when we do not have adequate information. In such cases, we must find new strategies with which we can work effectively even without plans.

Unfortunately, this year we have surpassed the dramatic 400 million ppm in environmental protection. This is the level of CO2 in the composi-

There are five principles that can help us plan effectively in a world without maps.

tion of the atmosphere when global warming has reached a point, due to the primary greenhouse gas effect, which scientists consider change almost irreversible. We already experience frequent tropical storms and floods, as well as droughts and increasing consequential losses. The coexistence of these factors will drive food prices up, which will then lead to social tensions, as seen in the Arab countries.

Many argue that we live in a period of a dramatic change, but I believe that it is not the period of change, but the change of the periods. We will need new principles and new approaches. If that is the case and our traditional planning models and maps are becoming less effective, what can we use as the basis of our strategies in an effective planning model?

LET US PLAN THE FUTURE WITHOUT A MAP! Having spent the last decade and the last fifteen years in this field, I have tried to approach this issue from scientific aspects. The theory of Frank Knight, a Nobel Prize-winning economist, about uncertainty is known to all of us.

The first type of uncertainty means that there are certain conditions, and the distribution of probability and risks can be measured reliably. This is the world where we all exist and operate and upon which national and financial policies are based. It is a kind of gambling, where the distribution of probability in the mathematical system connects with the macro and micro economy.

What we need to face is what Frank Knight referred to as the second type of uncertainty. This is the situation when the distribution of probability of an expected event cannot be defined. Perhaps it is because it is too new or we do not have any historical experience to define probability, or the rules have changed so

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No. 1: Start with what you have. Traditionally we think that resources must be accumulated before taking action. As we live in an imperfect world, we will never achieve exactly what we want. Consequently, instead of waiting for resources before acting, let us take a look at what we have and try to imagine the opportunity for which it provides a framework. This is known as an effect approach, compared to the cause approach. When scientists study an issue, they think of what it could be. We, designers and entrepreneurs, ask what it could lead to. So, instead of trying to define the final situation before asking the question itself, we should follow designers and entrepreneurs and ask the following question: Here is everything I have, what can I achieve with it? This is a much more effective method at the level of basic structural uncertainty.

No. 2: Find partners who share ideas with you, and combine your resources in order to create opportunities!

No. 3: Once you have those, get into it! Do not prepare studies or a strategy! I am delivering a presentation now, but only because I have to. There should be no more studies, only experiments!

No. 4: Complete small tasks that give feedback about the world! Check whether your model reflects exactly how things change in the world! The best way to do it is to experiment. You will have a picture about how the world is changing around you only after receiving feedback and once you have extracted as much as possible from it.

No. 5: Once you have noticed the change in your environment and you have taken an opportunity that is based on thousands of tests and experiments, take that opportunity as quickly as you can. Find a weakness, find a gap! Once you have reached that, involve your partners and concentrate all your resources on that gap. This process helps to recognise strategic gaps and break through them before anybody else would be able to respond. This is the only method with which you can find new areas that you were not even aware of before and could not have conquered without concentrating your resources or your friends, colleagues and allies.

home with a drone. The video was uploaded to YouTube in the night and was viewed more than two million times the subsequent day. This concept was so popular with the people that it was shared across the world and was also extensively covered by the press.

It was received much more positively than the Amazon announcement of their drone-based home delivery service. It was only an idea, though. However, with that test, we created interest in drones. We wanted to launch an international competition and announced a one-million-dollar contest the same afternoon called the Drones for Good Award. This is an award which was created to encourage innovation and creative applications with which people’s lives could be

IF THE WORLD IS CHANGING, ACCOMMODATE AND CREATE THE CHANGE

improved at several levels with the help of drones. It was a huge success. More than 800 entries were received from 57 different countries. Twelve different companies were established in the process, one of which was founded one day after the Dubai meeting.

Next year’s contest, the Robotics for Good Award, was announced the very same week.

When you are faster and more experienced, you will be able to respond more effectively not only to the changing world, but you can also create the change you would like to see in the world.

FROM FOUR HOURS TO WORK TO THE MUSEUM OF THE FUTURE Let me share with you a few examples from my own personal experience that will show you how I have reached these principles and how they function in real life. I was asked to create an exhibition of emerging technology and its impact on the economy and the government. I was not sure that people would be interested in it at all. I wanted to make it effective.

As I did not know how to achieve that, experiments began. Not only was an exhibition created, but seven various objects were taken to the site, presenting, among other things, 3D printing, extended and virtual reality, telepresence robots and drones which people could test.

It became obvious on the very first day that people were interested in the drones. An administrative officer with modern thinking approached me and asked, “Look, what can we use this for? You have employees here, the exhibition team, some of whom work in film. Why don’t you produce a video, presenting how to make drones serve the public?” I am not exaggerating. After that, the video was completed in four hours. On the video, an imaginary public employee shows how your driver's licence or personal ID card could be renewed through your mobile phone, Then, it would be printed in a local centre and sent to your

Let us analyse what happened. If I had started by saying that I was negotiating with the government, asking for one million dollars to establish an award with which people’s lives could be approved with drones, the answer would have been “You are crazy.”

That would have been the answer even if I had been certain of success. Instead, we based the process on what already existed, conducted various experiments to see how people responded to them, identified the potential responses and turned an area into a creative opportunity, which we did not even know existed. As I mentioned earlier, this state exhibition was called the Museum of the Future. The first was dedicated to the drones and turned out to be very interesting, but reached very few people.

However, it became a reference point and proof of the need for such events. The following year, we raised more funds and had a greater plan following a smart city environment where people could walk in and test things like cars driving themselves, teachers with artificial intelligence, personalised supply of drugs, playful education and health.

This generated a lot of public support. It was opened by the Prime Minister himself in front of 5,000 CEOs and ministers, and administrative officers came to take part in it from all regions of the world. After that,

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Dubai decided to invest in a permanent Museum of the Future. The building is already being constructed and will be opened at the end of 2017 with the objective of becoming the centre of development without maps. It will be characterised by prototype development, finding opportunities, tests, processing of the responses of the market and the world, and flexible spending on positive responses.

“If you wish to live effectively in this world, you must fully transform your previous way of thinking.�

This will be a special building with an interesting feature: certain parts of the building will be made with 3D printing by the company that was attracted to Dubai during one of the first discussions in a coffee house. It is an interesting story of how these principles can create an unexpected powerful result without plans.

At the beginning we would have been unable to define these as objectives, and we would not have known how to reach them. We had no budget or licences, and therefore the most my team and I could do was to project and anticipate the legal and licensing issues. Let us look at this for a moment. This could be the method whereby we learned to plan our strategies, as it exists in BA and MA training. You start with what you would like to achieve, select the best way to reach it, and then find tools for how to do it.

BUILDING CONNECTIONS, ACTION, REPETITION I believe that the way we currently live in the world is less and less effective, and if you still wish to live effectively in this world, you must fully transform your previous way of thinking. Start with the tools that are accessible! Let us take a look at the modes that provide an opportunity for work and the strategic opportunities available to us and only then start thinking of where we could get to as a result. This is a flexible approach to strategy that fundamentally assumes a world without maps. Well, this is a very interesting part of the story. With an hour of imagination, we can make a substantial change in the world, and we have a certain level of understanding of where it can lead.

There are only a few institutions that accept this space, full of ideas. Central banks could be such, a few prime ministers and huge companies like Apple.

Still, most of them do not live in the same space, and I would dispute whether truly effective ideas are created in their space. I would like to finish with a final thought. Unpredictable control is the key to efficiency in this dynamically changing world. This does not only mean that we are not aware of the rules; the rules also change from one month to the next.

The only thing you can do is to find partners who share your ideas and use your resources on the positive feedback of experiments, then start again.

Again and again...

Tokyo, Japan 26

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THE GREAT DEGENERATION

BY NIALL FERGUSON

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THE GREAT DEGENERATION IN BRIEF: EUROPEAN AND HUNGARIAN PERSPECTIVES Author: Niall Ferguson

Since the turn of the new millennium, the world has grown fond of oppositions: humanity versus technology, corporations versus disruptors, planners versus the people, governments versus innovators. Hungary is the perfect place to think about such oppositions because this kind of dualistic thinking seems to be in Budapest’s DNA.

As every tourist soon learns, Budapest consists of two cities, Buda and Pest, joined by bridge. It is a city that has lived between two religions at least; it lived through more than one hundred and forty years of Ottoman occupation after 1541. It is also a city that experienced a kind of semi-independence as part of the Austro-Hungarian dual monarchy until 1918. It is a city that lived in the middle of the twentieth century between fascism and communism. It is a city that was up to a quarter Jewish until the catastrophe of the Holocaust struck in 1944. It was a communist city from 1949 until 1989. But it was also the scene of the biggest of all the revolts in Eastern Europe against communism in 1956. “If you come from Paris to Budapest, you think you are in Moscow. But if you go from Moscow to Budapest, you think you are in Paris.”

Those were the words of the avant-garde composer György Sándor Ligeti.

Today, Budapest is still a city with a split personality, somehow undecided, or doubly committed, between West and East. It is part of the European Union now, but not, it seems, a wholly comfortable part of it. In the summer of 2015 there were scenes of mayhem

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in Hungary, as asylum seekers from Kosovo, Afghanistan, Syria, Pakistan and Iraq poured into the country.

For many, Budapest’s railway stations were gateways from East to West. When the trains would not carry them, thousands opted to walk to the Austrian border.

“The European integration in 2015 is an incomplete process.”

For all these reasons, Budapest is the perfect place to ask the question: what is Europe in the 21st century? What are its problems? Where is it going? How does it need to change? In my eyes, the European integration in 2015 is an incomplete and maybe an incompletable process. There is a confederation called the European Union, which has a Monetary Union at its core, but not all the members of the European Union are members of the monetary core. The country I come from, the United Kingdom, is a member of the European Union, but it is not a country that has

adopted the euro as its currency. Partly because of this half-in, half-out status, Britain is a country that conceivably as soon as next year will be holding a referendum on whether or not to leave the EU. Certainly, this is an incomplete project when a key member, one of the biggest economies in the European Union, is at least contemplating the possibility of leaving it altogether.

The near death of the euro and the near collapse of the Monetary Union in the crisis years 2011 to 2013 has revealed something very important: namely, that the critics of the original design of Europe’s Economic and Monetary Union (and I was one of them) were right about the fundamental mismatch between monetary unity and fiscal decentralisation. Let me take you back in time, all the way back to 2000. In that year, my good friend Laurence Kotlikoff and I published an article in the American journal Foreign Affairs.2 In that article we argued that Europe’s monetary union would degenerate – that was the term that we used. And this degeneration would happen, we claimed, because there was a fundamental in-

compatibility between creating a monetary union but leaving the member states to do their own thing in terms of fiscal policy.

We got this right, because we claimed that it would work for about ten years, and then fiscal imbalances would cause the whole thing to come apart. That very nearly happened. The enormous disparities in public debt, with Greece at one extreme with the largest of all public debts, very nearly blew the monetary union up. Indeed, if you go back to 2012, the vast majority of economists who wrote on this subject predicted that Greece would leave, there would be “Grexit” and the monetary union would quite possibly fall apart. It did not happen, but at this moment, the possibility of Grexit is still being discussed and it remains unclear whether or not a solution will be found to the fundamental crisis in Greek public finances that will allow Greece to remain inside the monetary union.

Now we have, as a crazy solution to this problem, a fiscal compact. And this fiscal compact essentially requires all members of the euro area to become

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THE GREAT DEGENERATION IN BRIEF: EUROPEAN AND HUNGARIAN PERSPECTIVES

more and more like Germany in economic terms, if not in any other respect. What does that mean exactly? Well, it means first of all that they all have to run more or less balanced budgets. No more of those enormous deficits that we saw particularly in the period of economic crisis after 2008. If you look at the International Monetary Fund’s projections running to 2020, by that year only one country in the European Monetary Union–Slovenia–will have a bigger deficit than 1.5 percent of GDP. Seven member states will actually be running budget surpluses. So this is the first step in the direction of what Angela Merkel has called the “Bundesrepublik Europa”, the Federal Republic of Europe: a European Union that looks more and more like the Federal Republic of Germany, at least in the way that it handles its public finances. No big deficits, a more or less permanently balanced budget.

But that is not the only way that Europe is becoming more like Germany. In the past, member states sometimes ran quite large current account deficits. But those days are gone. Partly as a consequence of doing what is often described disparagingly as austerity, fewer and fewer euro zone member states now have current account deficits. In fact, looking once again the IMF’s projections, by 2020 only three members of the euro zone will have current account deficits, and they will be really small ones.

If these are the economic consequences of solving the problem of fiscal imbalance, then the big question is whether or not this solution is going to be conducive to economic growth and the creation of jobs.

The answer to that question seems to be, only if this policy is mitigated by the European Central Bank’s doing quantitative easing (QE). This strange phrase has come into usage by economists, sometimes I think, mainly in order to baffle the public. What exactly does it mean? Well, some naïve critics say that it just means printing money, but that is not quite true, or at least it involves the creation of a special kind of money: not the money you or I are able to carry around in our pockets or keep in bank accounts, but the money that banks can keep in their accounts at the central bank. These reserves, a special kind of money, are the thing that is created when the European Central Bank does quantitative easing. And what it does when it creates this new money is to buy assets, to buy bonds to be precise, although other assets could conceivably also be purchased.

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What is the effect of quantitative easing then? Well, it seems to be to drive down already low interest rates, lowering already quite low borrowing costs. A side effect is to expand the balance sheet of the central bank.

That was probably a good idea if only because the balance sheet of the ECB had been shrinking, while the Bank of England’s or the Federal Reserve’s had been growing in the aftermath of the financial crisis. When the ECB adopted QE it was essentially playing catch up, adopting an unconventional monetary policy that had already been taken on by the other major central banks of the developed world. Now, one thing is clear: quantitative easing is not about to cause runaway inflation. The question really is whether it can suffice to avoid runaway deflation and on that question, I think, the jury is still out, although the outlook--at least as far as the projections I have already referred to--is reasonably good. The problem is that it is not yet clear that quantitative easing at the time of fiscal austerity is going to produce growth. And it is growth that matters for ordinary Europeans, because without economic growth it is highly unlikely that Europe is going to be able to solve its chronic problem of unemployment, and particularly youth unemployment, much less to absorb hundreds of thousands, if not millions, of refugees from the Middle East, North Africa and South Asia.

“For the foreseeable future, Europe is in low growth mode.”

Now let us shed more light on growth. At the moment, there is no question that Europe is underperforming.

The IMF is currently predicting that the European Union as a whole will grow by just 1.8 percent this year. What is more worrying is that it does not expect that rate to go above 2 percent all the way down to 2020. So, for the foreseeable future, Europe is in low growth mode. Moreover, that means that unemployment rates, which are extremely high on the periphery of the European Union, are likely to stay high. Right now unemployment rates range from 4.9 percent in Germany, which is the lowest, to 23 percent in Spain, an amazingly high figure that implies that quarter of the workforce are in fact unemployed.

The unemployment data require close scrutiny. There is a problem of youth unemployment, which is well known to everybody, particularly if one looks at

Southern European countries. The extent to which young people are struggling to find work is really quite extraordinary. But there is something that is also important, and I want to underline it because it gets much less attention in public discussion. That is the differential in unemployment rates between native-born Europeans and those born abroad. Foreign born workers are not significantly more likely to be unemployed in the United States than native born workers. That is also true of my own country, the United Kingdom. But when you come to the European continent, you notice something very remarkable. That is that foreign born workers are much more likely--more than twice as likely in some countries--to be unemployed than people born in the country in question.

That is a problem. Why? Because if a society cannot offer employment prospects to immigrants, and this also applies to the children of immigrants and even their children, then it is highly likely to fail at one of the most important things a modern society has to be able to do. That is to assimilate, to integrate new comers into the host society.

Let us add all this together, and try to work out what it means in the great historical scheme of things. Europe is not quite stagnating, but it is certainly not growing dynamically. Europe is failing to create jobs, and it is failing especially to create jobs for young people and for immigrants.

If one sets this in a broad historical perspective, it tells me at least that the great shift from the West to the Rest is continuing apace. Now, this is the biggest economic change the world has seen in five hundred years.

Let me explain what I mean by that. Five hundred years ago, if you had gone on a world tour, you would not have been especially struck by Western Europe compared with some of the other great civilizations you could have visited. Five hundred years ago, it would not have been obvious to a traveller that for the next five centuries there would be a huge divergence in living standards between the West and the Rest. Five hundred years ago, Ming China was in many ways the most sophisticated civilization in the world. It certainly had some of the biggest cities. If you take Nanjing or Beijing, those cities were far larger than Paris or London, for example. But beginning in around 1500 to 1600, a great divergence occurred that saw living standards, measured in almost every conceivable way, dramatically improve in Western Europe and in places where West Europeans settled in large numbers, notably North America, relative to living standards in China but also in the rest of the world. This great divergence is the most striking feature of modern history.

To give you an example, in around 1600 there was no huge difference in living standards between Eastern China and Western Europe. Indeed, Eastern China was

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THE GREAT DEGENERATION IN BRIEF: EUROPEAN AND HUNGARIAN PERSPECTIVES

percent, or a tenth. That is a halving of the Western share of the world’s population in the space of a century. These are huge shifts. What they mean is that people like me, white men from Northern Europe, are much less important and much less powerful than they used to be. We are still richer than most people, and in relative terms we are still quite powerful, but we are declining. We are a bit like the Elves in Tolkien’s The Lord of the Rings. Our time is passing. Our time has, in many ways, passed and the future belongs not to the West but to the Rest.

Niall Ferguson’s 3D holographic keynote speech

probably richer in terms of per capita GDP than North America on the eve of largescale European settlement. In statistical terms, the ratio of per capita GDP in North America to that in China was around about unity, one. As a result of the great divergence, by the 1970s, the ratio of North American per capita GDP to Chinese was twenty-two to one. The average American, when I was a teenager, was more than twenty times richer than the average Chinese. That was the great divergence.

It was a divergence that manifested itself not only in economics. Life expectancy by the middle of the twentieth century was double in the West what it was in most of the rest of the world. In other terms too, the West dominated the world of the early 20th century. The great empires that emerged from Europe together dominated the world’s geopolitical landscape.

They may have accounted for a relative minority of the world’s population, but those European empires controlled a huge proportion of the rest of the world’s people.

In our time all of this has changed. In our lifetime the great divergence stopped and it went into reverse. Let me give you an example. In the late 1970s, the aver-

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The question that we need to ask ourselves is what are the real drivers of this shift? Why is this happening? I think there are two answers to that question. One of them is a good news story, and one of them is a not so good news story. The good news story is, as I have argued in the book called Civilization, that the Rest have essentially downloaded the West’s killer applications. These were the things that after 1500 made the West so successful. You may wonder what those were. One was the idea of competition in economic as well as in political life, a very Western idea that you

would not really have even encountered in Ming China.

Another was the notion of science in the sense of the Scientific Revolution of the 17th and 18th centuries.

That was an essentially Western project. There were no Newtons in the Ottoman Empire.

Number three: the notion of the rule of law based on private property rights. That was a Western innovation, especially deeply rooted in the English-speaking parts of the West. And then, number four, modern medicine: that branch of the scientific revolution that doubled and then more than doubled life expectancy.

Killer app five was the consumer society, the notion that we should all have a great many clothes in our wardrobes. (There is no point, by the way, in having an industrial revolution if people do not a great many clothes because the main achievement of the industrial revolution was radically to reduce the unit costs of things like the shirt and the suit that I am wearing.

In addition, if my demand for shirts and suits was not really price-elastic, if I did not buy more the cheaper they got, then the industrial revolution would not have succeeded.)

age American was twenty-two times richer than the average Chinese. Today that ratio is down to four to one. From twenty-two to one, to four to one in just the space of my adult life. And we see this convergence manifesting itself in all kinds of different ways. Let me give you just one example. China’s GDP back in the late 1970s, when the People’s Republic first embarked on economic reform, was a really small percentage of the world’s total and the European Union’s was a really big percentage. But next year, unless the projections turn out to be wildly wrong (which seems unlikely as it is only a year away) China’s GDP will exceed that of the European Union. It will become a bigger share of the world economy than the EU is right now.

Let me focus a little bit on what I mean by “the West.”

In a wonderful book called The Clash of Civilizations, Samuel Huntington, the late great Harvard political scientist, defined the West essentially as being Western Europe and those places where West Europeans settled in large numbers: North America, for example, or Australia. Back in 1950, when Sam Huntington was just beginning his academic career, Westerners, according to his definition, were around a fifth of the world’s population. By 2050, according to the United Nations’ projections, that share will be down to ten

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THE GREAT DEGENERATION IN BRIEF: EUROPEAN AND HUNGARIAN PERSPECTIVES

Finally, we have the sixth killer app: the work ethic, the thing that got me out of bed at 6 o’clock this morning to write the final version of this essay. If I did not have the work ethic, I really would not have bothered, and this essay would be significantly worse than it actually is.

Those killer applications for around five hundred years were monopolized by people in the West. They really did not exist in the rest of the world. But in our time that has changed. A hundred years ago there was really only one non-Western society that understood the importance of my killer apps, and that was Japan. It was the first non-Western society to download everything that I have just listed, from the notion of competition in economic life through to the work ethic. But Japan was an outlier. Most non-Western societies did not do that. Indeed, they spent much of the 20th century trying other models. Think for example of what Chairman Mao tried to do to China. He had killer applications all right, but they actually killed people, and killed them in their millions. Only in the late 1970s, after Mao’s death, when Deng Xiaoping was in charge, in China did that change. Only then did China begin to download the killer apps that had made Western civilization so prosperous. And, lo and behold, as soon as he did that, China’s growth rate dramatically increased. Prosperity came and hundreds of millions of people were pulled out of poverty.

So part of what we have seen in the world today, is a belated adoption by the rest of the world of the institutions and ideas that really worked well for the West.

That is great news. That is a cause for celebration. It can only be good news that more and more Asians and now Africans too are leaving poverty behind and discovering the benefits of competition, of science, of the rule of law, of modern medicine, of the consumer society, of the work ethic. Get the champagne out: history turned a corner, in our lifetimes. That is the good news.

The bad news? Well, the bad news is that, even as the rest of the world is getting better institutionally, that is to say getting better in its thinking, we in the West appear to be getting worse. You can download the killer applications if you are a non-Western society, but you can also delete them, or at least fail to update them, if you are a Western society. That is the problem that concerns me the most today. We in the West, in Europe, also in the United States, are suffer-

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ing from a strange institutional degeneration. Let me give you some insights into the four aspects of degeneration that I see today.

The first is generational, in the sense that our policies in nearly all Western states are calculated to create enormous imbalances between the generations. The way our welfare states and pension systems work, in the context of an aging population, is bound to create burdens for the next generation that they will have to shoulder to finance our retirements. The Baby Boomers are exiting the workplace. They are putting their feet up and looking forward to a long and cushy retirement. But who is going to pay? Their children, their grandchildren, their great grandchildren.

Let me focus on Hungary. Well, right now just around ten percent of the Hungarian population is aged between fifteen and twenty-four. Those are the crucial years educationally, in many ways they are the formative years, the years that produce great creative minds. It is all downhill from your late twenties

“I do not think it is too much to write that we are witnessing a slow, creeping crisis of the Western civilization.” in my experience. So just one in ten Hungarians are in that magical age group we call “youth.” Meanwhile, we have the percentage, aged sixty-five or over, rising from 17 percent to, perhaps, as high as 27 percent by 2060. And that is by no means the worst example. Germany, Italy, Portugal, Spain are all ageing more rapidly. By the middle of this century, in those countries, the population aged 65 or over will be one third of the total; one in three of retirement age and older. In Hungary, by the end of this century, one in ten people are projected by the UN to be 80 or older.

This huge demographic shift, which has its roots in changing patterns of fertility and mortality, is making Europe an old and ageing society. But we are still set up with welfare states that were designed in the postwar period for youthful societies, with relatively large proportions of the population in employment. Either we fix these systems radically, or young people are

going to be shouldering a rising burden of taxation to support the entitlements of the elderly.

The second way in which we are degenerating as a society is that excessive regulation is tying our economy up in knots. It is a distinctive feature not just of the United States, but also of the European Union, that it is staffed by bureaucrats who like nothing better than to draw up enormously complicated regulations and impose them on the rest of us. That is what bureaucrats live to do. This excessive regulation is going through a boom right now in the wake of the financial crisis. Why? Because the idea has taken root--an idea that I think is quite wrong--that the financial crisis of 2008 happened because of deregulation. Because deregulation caused the crisis, reason the bureaucrats, we now need regulation and plenty of it to prevent another crisis from occurring. The great Viennese satirist, Karl Kraus, famously claimed that psychoanalysis was the disease of which it pretended to be the cure. Well, the same is true of regulation. It is the disease of which it pretends to be the cure. The more we regulate our financial system, the more unstable it becomes, in just the way that complex systems tend to be more unstable the more complex they become.

Third, the rule of law, which I am strongly in favour of, is something less good when it becomes the rule of lawyers. And regulation, in all its complexity, is a gravy train to lawyers. The one part of every business that is rapidly expanding at the moment on both sides of the Atlantic is the compliance department, staffed by people with law degrees.

Fourthly, and finally, I think we see a degeneration of the institutions of civil society. By civil society I mean the voluntary non-governmental agencies that used to do so much in Western civilization, and which today have largely been marginalized by the ever expanding public sector, the all-powerful state.

I do not think it is too much to write that we are witnessing a slow, creeping crisis of the Western civilization. And there is also, in addition to the threats from within that I have just described, a threat from outside.

Radical Islam is the ideological epidemic of our time, just as Bolshevism was an ideological epidemic a century ago. It is an astonishing fact that up to four and a half thousand Europeans have left the European Un-

ion to join the Islamic State in Iraq and in Syria. Think of it: four and a half thousand people opting to join the Caliphate in a misguided and murderous attempt to turn the clock back to the times of the prophet Mohamed.

Or consider the fact that by 2030 Muslims may account for as much as 10% of the populations of Belgium, France and Sweden, 9% of the population of Austria, 8% of the Dutch, Swiss and British populations, and 7% of all Germans and Greeks.

I have a number of remedies for the institutional degeneration of the West that I have described to you.

You can improve public financial accounting to end the phenomenon of vast off-balance-sheet liabilities.

You can introduce “sunset” clauses for laws and regulations so that they are expiring rather than accumulating. You can reform legal systems, simplify the laws as well as the regulations. And, to upgrade our civil society, you can do a lot worse than to found new and better independent schools.

All of these things can do much to halt our institutional degeneration. But I do not believe that reforms like these alone will suffice to solve the fundamental imbalance or imbalances that I see today. The imbalance between an aged and an ageing Europe and a youthful Muslim world. The imbalance between a wealthy Europe and a poor Muslim world. The imbalance between a post-Christian Europe – a secularized, unbelieving Europe – and an increasingly devout Muslim world. The imbalance between a disarmed Europe and an increasingly militarized Muslim world.

In its long history, Budapest has experienced firsthand what these tendencies can lead to. Our best solutions to the challenges that we face, from the challenges of public financial overstretch to the challenges of mass migration across the Mediterranean, may well come from technology. But if we do not address the issues of institutional degeneration that I have mentioned in this essay, then technology alone will not save us. The early 20th century saw staggering technological advances, much greater than the ones in our time (compare Twitter with the atomic bomb). But what the great technological innovations of the 20th century did not do was to inoculate us against fascism and communism. That seems to me to be a very, very important lesson to learn in Budapest.

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A MULTIPOLAR WORLD ORDER HAS OPPORTUNITIES TO OFFER

Prime Minister Viktor Orbán

Prime Minister Viktor Orbán’s speech at Lámfalussy Lectures Conference 23 January 2017 in Budapest

Honourable Governor, Honoured Conference Guests, I thought a great deal about whether to accept the invitation to this conference. Beyond doubt, the invitation itself was an honour, but such events have been witnessed in world politics recently–some of which have already been mentioned here, such as Brexit, a new US president, and all their consequences–that one cannot speak validly about the future without making statements of strong political content. And this entails risks, and indeed it may divert the customary peaceful course of the conference away. So, this was what I had to consider. But eventually I accepted the invitation. Firstly, this was because here in Hungary ever since the nineteen-eighties we have been following Mr. de Larosière’s thoughts; so, true legend has arrived here, with whom it is an honour simply to share the same table. Also, here is Mr. Tian Guoli, who has been our friend for many years, but is a particular friend of ours in the policy of eastward opening. In addition, he is the one who, at our regular meetings, reduces our over-inflated European complacency to the correct size by supplying us with figures which you could also hear just now. I am also grateful to him, and it is an honour to be in his company today.

Furthermore, China’s rise draws our attention here, in Europe, to a psychological problem. There is a saying which sounds primitively simple: “whatever exists is possible”. Europeans do not understand this–at least

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they do not understand it when it comes to China.

Instead of trying to learn from what is happening in China, we invest a considerable amount of energy in explaining why what exists in China does not really exist. Or if it does, then it is only temporary and lacks foundations, that pace is unsustainable, and the internal tensions in Chinese society are such that eventually the whole thing will fail politically… So instead of learning and understanding that whatever exists is possible, we want to explain it to ourselves.

This is because everything that exists in China and is possible pushes us further down the ranking. Instead of accepting this fact and wanting to learn, we are busy trying to prove the opposite. Therefore, meeting Chairman Guoli can perhaps save us, Hungarians from this European problem.

Ladies and Gentlemen, The ultimate reason why I finally accepted the invitation, however, was Professor Lámfalussy himself. This is because, as Mr. de Larosière has already pointed out, today we are remembering a great man, who was a great friend of our country – and continued to be, even after the communists forced him to flee Hungary. he had to escape as far as Belgium; still, he remained a Hungarian and a good friend of Hungary throughout.

He could distinguish between the political regime of the time and his homeland – and this is a virtue which we should honour. He was also a good man, as you may

have heard. In our culture, there is a core principle: “…on earth peace, good will toward men”; Professor Lámfalussy was a man of good will, and therefore he received peace, love and respect from us all in return. If this were not enough in itself, I should also tell you that he was a colleague of mine. Please forgive me for boasting: he worked with me as an advisor, and was my supervisor, in an intellectual sense of the word. He regularly warned me against my youthful excesses with these words of caution: “This will cause trouble, Viktor”. He was also our messenger and authenticator in the Western financial world, so we owe him nothing but gratitude. In addition, we could also learn from him, and it is well worth following certain examples from his life in ours. He was an open-minded man, and this has special significance in Western democracy.

Our mindset–our Hungarian or perhaps we can also say our Central European mindset–is that good democracy is based on reasoning; we therefore support such a vision of democracy. This, however, requires openminded people; it requires an open spirit and a forthright character. And Professor Lámfalussy had both an open spirit and a forthright character, thus we could say that he embodied the best traits of our kind, the Hungarian people. I could also learn from him that in the end it is always character that counts–these may well

have been his very words. There are difficult intellectual questions which must be considered and require a good brain.

This is very important. Open brackets: you can even buy brains–especially if you are prime minister, close brackets–, as you can hire the smartest people. And there you are: you have brains. That is how simple it is in our line of business–easier than in other jobs. So, you have the brain, and you have the difficult questions, and you have the intellectual challenge. But at the end of the day, Professor Lámfalussy said, when one must make a decision it always comes down to one’s character: “So Dear Viktor”, he continued, “once a year you should go out for a week-long walk in the desert, just like I do”.

And this was the case: as long as his physical condition permitted, the dear Professor always kept to this habit.

But the most important thing I learnt from him was the result of a provocative situation. Elders may still remember that at the beginning of the nineteen-nineties there were cutthroat ideological battles about what the character of the post-communist regime should be like: whether it should be liberal, Christian, or whatever.

These were difficult times, full of provocation. On one occasion when the Professor, who was widely known to be a Christian, came home to Hungary, he could not have foreseen that an ill-mannered journalist would

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Prime Minister Viktor Orbán’s speech at Lámfalussy Lectures Conference

“A prerequisite for a strong economy is that the representatives of the financial world and politics should pull the cart in the same direction.”

Ladies and Gentlemen, A prerequisite for a strong economy–and we also learnt this from him–is that the representatives of the finan-

ask him if he was a Christian. This was a flagrant breach of the Christian rule that we don’t ask each other such a question. Nevertheless, he was asked this question, and I think his answer, which I have kept in my pocket or close to my heart ever since, was the right one. With an air of perfect calm, he said: “I try, but I don’t always succeed”.

Ladies and Gentlemen, These are the memories, therefore, which I believe are worthy of evoking at a Lámfalussy Conference. I do not believe, however, that these are the reasons why this award has been named after Sándor Lámfalussy. Perhaps a more likely explanation is that in Hungary he is regarded the father of the euro. Once, when I nominated him for a state decoration, my supporting argument was that he was world-famous outside Hungary as well. Perhaps our guests do not quite understand what I was getting at, but I think we Hungarians understand.

He was the Hungarian who was not only called “worldfamous” in Hungary, and this was probably because of the role he played in the creation of the euro. I am not sure he would have agreed to naming this award after him, because he did not regard himself as the father of the euro. When I talked to him about this, he said that naturally, a great variety of work had to be done,

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but the truth is, for the euro the skills of an economist were not the primary need; these were helpful, but a strong political will was more important. Therefore, he said, one should not seek the father – or founders – of the euro among economists, but among the politicians of the time; and in this department, France and Germany were particularly distinguished. I asked him how he found the courage to advise politicians to create a monetary union without a fiscal and political union to back it up; whether he felt it was brinkmanship. His answer shocked me, because he said that in the end politicians will realise that it is necessary to create a fiscal and political union to back up the monetary union.

This shocked me, because it is rather risky to entrust a historical enterprise of such proportions to the common sense of politicians. So far, time has not shown the Professor was right: it has rather vindicated our doubts.

In essence, President de Larosière’s presentation was also centred on this doubt: whether European decisionmakers will have the wisdom to make the decisions necessary for the survival of monetary union. I do not know the answer to this question – all I know is that this is the biggest question for the future of Europe.

The conclusion I can draw from this story is the following: we have also learnt from Professor Lámfalussy that the basis of successful economic policy is politics, particularly its stability.

cial world and politics should pull the cart in the same direction. Time has shown he was right. If we look at the recent history of the National Bank of Hungary, we can reasonably conclude that when the National Bank of Hungary was in opposition to the Government–it was not so long ago, we can still remember that–, politics and finance were heading in two distinctly different directions, and Hungary went through a great deal of unnecessary suffering. Since the national bank stopped being in opposition and started seeking cooperation with the political leadership of the day, we have observed such spectacular economic growth, which has also been mentioned by previous speakers.

Ladies and Gentlemen, Now I should talk about the fact that since the economic crisis of 2008, referred to as the “wake-up call” by our French speaker, the world economy and world politics have witnessed a paradigm shift, and today the success of European countries is measured whether they have been able to adapt promptly to this shift: which ones responded immediately, which ones reacted more slowly, and which ones are still only in the process of waking up. The message of this paradigm shift–a somewhat pretentious term, of course, but it makes sense–is that the world had an old system, an old paradigm, within which thoughts were born and placed. And, to use another elegant linguistic innovation, after 1990 this paradigm was called “the unipolar world”, in fact, a world order with a single centre, a single centre of power. We lived in this world for almost twenty years. The world’s lines of power were arranged in a system around a single centre of power. The essence of the new paradigm is that there are multiple centres; I would rather not use the term “multiple poles”, because in the Hungarian language that means two: a northern and a southern. That

is not the same as what I am talking about, because here there will be more than two poles, but these are not the ones I am talking about, because there will not be two poles, but even more, therefore it is perhaps more accurate to use the term “multiple centres”, “multiple centres of power”. A necessary consequence of this paradigm shift is that there is no consensus about it. Does it exist at all? Among European political leaders today there is no consensus on whether the crisis afflicting Europe after 2008 is a cyclical one or a structural one related to competitiveness. If you were to interview the 27 EU prime ministers, you would see that there is no consensus on this. In other words, a necessary concomitant of any paradigm shift–now as ever–is that the followers of the old order must engage in fierce debate with the followers of the new order. We Hungarians could talk about this at length, in relation to our economic policy since 2010.

“The essence of the new paradigm is that there are multiple centres…”

Ladies and Gentlemen, When one speaks at a conference such as this, the first question to be straightforwardly and openly asked and is appropriate to be attempted to answer is how to interpret the global situation in which the conference itself is taking place. In addition to the economic figures which we heard earlier, the decisive element is, of course, the new president of the world’s largest military power, the United States, his inauguration, and the policies that he is proposing. I have been listening to analysts and commentators: the followers of the old paradigm, if you like. Even though we have had Brexit, this US presidential election result and a referendum in Italy, they continually try to convince us that there is less to this than meets the eye, and that you cannot possibly bring about the sort of changes that the US president is aiming for, or that we usually contribute to US presidents. I would like to point out that this is foolish. Whatever exists is possible–and this is true not only of China, but also of the United States. Naturally it is still too early to assess the extent and magnitude of the changes which the current shift in the character of the Western world will bring about. I would advise all of us, myself included, to exercise caution, but I think that last week we heard a key phrase, and we must take this key phrase seriously.

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Prime Minister Viktor Orbán’s speech at Lámfalussy Lectures Conference

If we understand this correctly, we shall understand everything in this respect. This key phrase is not the one quoted by most people–“America First”–but this: “it is the right of all nations to put their own interests first”.

This represents a great change. These words could not have been uttered by an earlier US president. Now they have been uttered. This means that multilateralism has come to its end, and the era of bilateral relations has dawned. For us this is good news, because it is an unnatural state of affairs when, influenced by external pressure, one dare not state that one’s own country comes first when governing, making decisions, or considering what the central bank should do. This unnatural state of affairs is over. We have been given permission, if you like, from the world’s highest secular position, that we, too, care allowed to put our own interests first. This is a great thing; it is a great freedom and a great gift.

“…multilateralism has come to its end, and the era of bilateral relations has dawned.”

Ladies and Gentlemen, I am convinced that in the world economy a single pole necessarily entails a single model, while multiple poles entail multiple models. This means it is very difficult to arrange a number of different models into a single system with multilateral agreements, and therefore new opportunities will emerge for bilateral agreements in military policy and economic policy as well. Consequently, there is no single “one size fits all” economic policy which would be equally successful for nations with very different positions and capabilities. In fact, today the world economy is growing–or at least this is my understanding, or the conclusion I drew from our Chinese speaker’s presentation–and economic growth is being sustained around the world precisely because there are different models, and because there are different approaches to economic policy. If China were to imitate us, I find it hard to believe that the world economy would grow at its current rate. Consequently, we should welcome the rise of new poles or new centres, rather than see them as a threat. This is a decisive issue, because logically today’s world leaders–that is, we westerners–might perceive this as a threat, as a loss of status, and as a risk. If this is how we approach the rise of multiple new centres, however, I am convinced that we shall doom ourselves to failure.

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“A world order with multiple centres has opportunities to offer.”

Lámfalussy Lectures Conference, 2017 Prime Minister Viktor Orbán’s speech

A world order with multiple centres has opportunities to offer. Here is China, which we’ve already spoken about.

We can clearly conclude that it is not a comet, but a fixed star, that will have a determining role in the world economy for many decades at least. To bring up a light issue–an easy, safe topic–here is Russia. Russia–let us be honest–has survived Western attempts to isolate it and overthrow its regime change. It has survived low oil prices, it has survived sanctions, and it has survived the free, impartial, internal activities of NGOs – which can hardly be described as pro-government, and which lacked external interference. It has survived all that, and there it is. It is therefore unreasonable–and particularly unreasonable in Europe–to ignore the power and the opportunity that Russia represents. This would naturally require more European self-confidence, and we should be able to honestly claim–but probably the reason we don’t is because it is not true–that we Europeans can defend ourselves militarily, without external assistance. But we do not dare to say that, because it is not true. I would like to add a sentence to this later, in connection with something one of our other speakers said. For now, I would just like to observe–and here I apologise for interfering in France’s internal affairs– that we have good reason to welcome the fact that a man who I hope will be the next President of the French Republic will be visiting Berlin today or tomorrow and the most important issue he will raise will be that of a common European defence alliance. This would be something that could open the way to self-confidence; and after self-confidence, to negotiation capacity in all directions, including Russia. And we have not even mentioned India yet–perhaps this is not why we are here today–but which still has plenty in reserve, and which is performing at the highest global level in areas which will have a major impact on the world economy over the next twenty years.

Ladies and Gentlemen, New centres are therefore emerging, and long-forgotten trade routes are revived. With due respect, we should mention that in 2013 it was President Xi Jinping who launched the “One Belt, One Road” initiative, which was the first in a series and which, I believe, will

be followed in the period ahead. In a presentation such as this, the second question we should touch upon is how Europe is perceived from a Central European perspective. The answer can be summed up in a single sentence: we can barely recognise it.

“New centres are emerging, and long-forgotten trade routes are revived.”

Europe is struggling with four major crises at once, and recently it has been unable to respond to any of them satisfactorily. It has a growth crisis–or, more precisely, a competitiveness crisis. It has a demographic crisis; it has a public security and terrorism crisis; and it has a foreign policy crisis, illustrated by the fact that we are unable to exert any influence whatsoever over events in the regions that directly affect our lives. Here we could mention Syria, or even Ukraine. This is a foreign policy crisis.

Europe is drowning in debt. Perhaps there is no need for me to quote the figures here, as you know them better than I do. The countries which form the European

Union generate a deficit of some one thousand million euros every single day. As we have heard from Mr. de Larosière, economic growth is extremely sluggish: over the past decade it has averaged just over one per cent annually, with the Eurozone’s growth rate being under one per cent; and since 2008 six million jobs have disappeared from the European labour market as a whole.

Today I increasingly hear voices of resignation, as if experts–but decision-makers may slowly follow as well– were saying that also in the decade ahead European growth will barely exceed one, or perhaps two, per cent. Europe is now nowhere near as safe as it once was.

Living alongside us, there are hundreds of thousands of people about whom we do not know what they are doing here, why they came here, or exactly what they want. The following may sound uncharitable, but it is true all the same, and, rather than imagining what we would like to see, we must face up to a harsh reality.

And the harsh reality is that wherever immigrants have settled down in Europe in large numbers, crime rates have increased immediately–not later, but immediately!–and we must take account of the consequences.

In summary, the European continent is becoming ever weaker. It has been reduced from a global player to a regional player, and soon it will be forced to struggle even for the status of a regional player.

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Prime Minister Viktor Orbán’s speech at Lámfalussy Lectures Conference

Ladies and Gentlemen, In a presentation like this–and in particular when we talk about Lámfalussy and open democracy based on reasoning–we cannot avoid the question of how this could happen. Why is this so? There are as many answers as there are people. For my part, I do not demand that anyone should accept my answer as the only possible one–I would rather just contribute to the debate. I am convinced that Europe have set itself some ambitious goals, and has failed to achieve a single one of them. I was Prime Minister for the first time back in 1998, when we had to make preparations for EU accession negotiations. So, I have the advantage– or disadvantage–of remembering those negotiations with the heads of government at that time. Chirac and Kohl sat with us at the negotiating table, and we made grand plans for the euro to become the world’s second reserve currency, alongside the dollar. That plan has failed. We said that we should create an independent European security policy. That plan has also failed.

And we then set out to create a Eurasian economic zone, which, we said, should extend all the way from Lisbon to Vladivostok. That is now completely off the agenda, so that plan has failed as well. So when I try to identify the reasons I am not talking about some general decline, which would lead us to a perpetual debate on civilisation, but about the failure to achieve specific goals.

My explanation is that Brussels has become enslaved to a utopia. The name of that utopia is a supranational Europe and recently it has turned out to be an illusion.

There is no European people: there are only European peoples. And if there is no European people, you cannot build a system of European institutions on the foundations of such a non-existent European people. You must accept the fact that in Europe there are nations, and a pan-European system can only be built upon the policies, intentions, will and cooperation of the nations. We got all this wrong. In recent times this distinction has been lost. Perhaps those with more experience than me can back up my view that if we look to the European continent’s successful periods, we can see that Europe was never strong – or at least, not over an extended period – when it was directed from a single centre of power. We were strong when multiple centres of power existed within Europe. And today it is the policy of Brussels to transform these centres of power into a single centre of power. This, I believe, answers the question of how we got to where we are today.

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And now, Ladies and Gentlemen, we must ask one last question. If things stand as they do, how can we make Europe competitive again? Mr. de Larosière gave us an appealing and ambitious answer to this question. For my part, I shall also try to give an answer, but keeping low, at the level of political reality. In my view, for Europe to be made competitive it must first abandon the illusion of federalism. We have come to the brink of the abyss, the ground under our feet has run out. The world’s fifth largest economy has left the European Union. This process will not stop if we carry on like this, thus we must abandon the illusion of federalism. Consequently, Europe itself must also be made multipolar.

If you look at what the Visegrád countries are doing in this regard, you can see that we have set exactly that goal for ourselves. As a region, the Visegrád countries want to become one of the poles of the European Union; we want to become a strong region that also competes with Europe’s other regions or poles, and that increasingly contributes to Europe’s overall performance.

“…how can we make Europe competitive again?”

Another milestone on the path to competitiveness is for us, Europeans to enter into new types of cooperation.

First of all, we should seek a new arrangement with the United States, instead of the doomed free trade agreement. There is no point in persisting with that: it’s dead, it doesn’t exist. Perhaps we shouldn’t discard all the results of the work done so far, but nonetheless that agreement will not come into being. So instead, we must enter into something different. We should find the appropriate contractual mechanism in which the United States and Europe can conclude an agreement. We should develop and conclude an agreement. We should seek out opportunities and come to agreements with China. We should place the issue of Russia back on the agenda, and we should try to engage in a process which today can be described as a competition for concluding agreements – a competition which in the past we Europeans have been continually left out of.

On the path to competitiveness I think it is important for us to reconsider the financing of the individual European national economies. We have just heard an excellent presentation on this issue. I am convinced that we cannot fire up our economies if we have nothing to invest. In this respect, Central Europe is not doing badly,

Lámfalussy Lectures Conference

as, first of all, I think there is a European bank which can see the right direction. This bank is the EBRD. It would be in our best interests to expand its activities across the entire continent–but in Central Europe in particular. And we are in an advantageous position, because we have friends–including the Bank of China–who have stood by us and support us on issues of financing. And finally, the last milestone I can see on the path to competitiveness is innovation: let us place more emphasis on innovation on a European scale. I would note that Hungary is in a fair position among Central European countries, and we are performing fairly well in terms of the sum our central budget devotes to innovation as a proportion of GDP. I think that this performance is commendable, but it is still not enough, and the amount spent on innovation from the Hungarian budget should be increased.

And now, in the style of Mr. Lámfalussy, I would like to refer back to two important thoughts raised by Mr. de Larosière. The first is the question of demography that he raised. Naturally I shall give a political answer, which is by its nature different from the answer of an economist. In my opinion a nation or a community that is unable to reproduce itself does not deserve to exist, and judgement will be passed on that nation in the highest place possible. This cannot be disguised with chicanery; it cannot be disguised with immigration, migrants or guest workers because the problem is more deeprooted. A community which is unable to sustain itself demographically does not believe in its own future, and therefore waives its right to exist. This is also the gravest problem that we Hungarians face: our house is on fire, but so too is that of all Europe. I am convinced that

if a community is unable to reproduce itself independently but seeks assistance and a solution from outside it must give up its former national identity – in part, or perhaps in full. In such a case that nation is no longer the same nation. This is written in the book of fate – or at least, this is what I as a politician interpret from that book. I am convinced that Europe must find a solution, because this is its existential question. Hungary has a family policy which is already producing results, but let me repeat: our house is also on fire. Returning to demography, I say this to President de Larosière: the reason I dare to use such forthright language on this matter is that we are a people with extensive experience on this subject. Forced relocation, forced settlement, population exchanges, and all their consequences–this knowledge is coded in our genes. We know precisely that if we resort to such means this will end in a loss of nation, and a loss of our country – we can see this by, for example, looking back in Hungarian history to the period of Turkish occupation. This is why we have the courage to take such a firm stand on an issue that appears to be so scientifically complex; after all, politics is a practical pursuit, not a theoretical one.

As regards foreign policy, European foreign policy and security policy–as the President suggested–, here is another serious question, which we must be addressed in the frank style of Professor Lámfalussy. The question is the following: can we protect the continent against any–and, I repeat, any–external threat without America, or, in a bolder manner, without the Anglosphere?

This is the great question for the future. The key to solving this question is something that appears to be the

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Prime Minister Viktor Orbán’s speech at Lámfalussy Lectures Conference

simplest thing in the world: German-French security and military cooperation. I am talking about a common army and a common security system–or whatever we choose to call it. This sounds simple enough, but when you think about it, this is something we have never had.

And, despite its simplicity, this demonstrates the complexity of the matter. The question is whether we–or those concerned–will be able to create such a defence alliance. Well, the talks that I have already mentioned in Berlin today or tomorrow will give us some guidance.

“…the policy of eastward opening also forms part of the Hungarian model.”

Ladies and Gentlemen, Finally, as I am standing here before you as the Prime Minister of Hungary after all, I should also say a few words about Hungary – primarily perhaps on account of our guests from China and France. They may find it strange that a country that accounts for just 0.2 per cent of the world’s population–that’s us–states its opinion on issues of world politics in such wide-ranging terms. And I can understand your reservations, because in politics, too, the most important rule is that everyone should know their place. Just as in private life, a country must know its place–based on its defence capabilities, GDP, population and territory. And once it has occupied its appropriate place, it should know exactly which issues it is free to speak about, and which ones it is not free to speak about.

So perhaps Hungary volunteering its own ideas on issues such as these requires some explanation. There is a British proverb, which may sound somewhat awkward when translated into Hungarian: “Nothing succeeds like success”. This explains why the Hungarians have the courage to take a stand on these issues; if we look at the period from 2010 to 2016, or before 2017, we can see that Hungary has turned from a black sheep into a success story.

Of course, not everyone acknowledges this, but it is important that the facts and the truth should be acknowledged even when they are in favour of Hungarians.

Therefore–just to take two more minutes of your time– we should recall the fact that in 2010 we had no economic growth: virtually none. State debt had risen to over 85 per cent. Inflation could not be forced below six per cent. The budget deficit had soared to 7 per cent, while unemployment stood in the range between 11.5 and 12

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per cent. Out of ten million Hungarians, fewer than 3.7– three million, seven hundred thousand people–were in work; and only half of them–one million, eight hundred thousand–were paying taxes. Therefore, our revenue was next to zero, while our expenditure was fixed, given that the state, businesses and families were all deeply in debt. It is hardly surprising that the first country to seek a bailout package from the IMF was not Greece, but Hungary. This is where we started from. Today we can say that our debt-to-GDP ratio is on a declining path, the annual budget deficit is permanently around two per cent, the economy is growing by approximately three per cent annually, the unemployment rate stands somewhere around four and a half per cent, closely approximating to full employment. Our foreign trade balance also repeatedly closes each year with a large surplus.

At times like this, the question is how this was achieved: how one can turn a country around 180 degrees in six years. Without trying to give advice to anyone, we would like to draw your attention to the following facts.

The first and most important thing is political stability: if it is true that politics–stable politics–is the basis of good economic policy, political stability must be created. Without political strength and political stability there can be no successful economic reforms or successful changes in economic policy. Political strength is not always an appealing thing–especially in intellectual circles. Analysts do not like it at all, and there are also some politically poorly trained financial experts who believe that the banking sector should have more room for manoeuvre. But the truth is that those who want a predictable business environment always have a vested interest in strong and predictable politics–not to mention 95 per cent of the constituents.

The second important thing that led us to success was strict fiscal policy. All I would say about this–referring back to the presentation of President de Larosière, who said that either it is accepted or not–is that the people must accept that there are times when strict fiscal policy is necessary. My view is that the people will only accept strict fiscal policy if they find it just. A simple statement in a complex sentence. The people accept strict fiscal policy if they perceive it to be just. Every nation will have a different recipe for this. In Hungary, for instance, it started with a fifty per cent reduction in the political elite. We did not introduce strict fiscal measures of any kind until we had slashed the number of politicians by half: a parliament with half as many MPs, and local councils with half as many councilors, just to men-

tion one thing. And I could list many other elements as well. All I want to say is that an economic recovery programme based on strict fiscal policy is politically both manageable and possible. This is why I am standing here, and this is why–having put the country’s fiscal affairs in order–we did not lose the elections in 2014. Winning those elections is proof that this is possible; it is possible, but complicated, and should not be approached in a conventional manner. This means that the issue of justness should be included in the viewpoints of fiscal policy.

The third thing that could explain Hungary’s success is the creation of a workfare society, instead of a benefitcentred society. Naturally, it is not my place to tease, but I would be intrigued to see the government of a Western European country–say of France–announce that the maximum period for which unemployment benefit can be claimed has been reduced to three months, after which there will be no benefit of any kind.

Instead there is public employment: those who work receive a salary, while those who do not receive neither a salary nor benefits–and we wish them the best of luck. This is a very harsh statement to make–one that is almost inconceivable for most Europeans, but which is not far from fairness and justice. Hungarian people took the view that they did not want their taxes to be spent on supporting people who are capable of work, and it is the duty of the state to arrange for these people to receive wages rather than benefits. And if the market cannot take care of this, then the state should devise some temporary bridging solutions. But the essence of the matter is that everyone should feel that the taxes they pay are well-spent. As a result, it was later possible to reduce taxes. I shall not list them all, but in Hungary corporate tax is at 9 per cent and we have a proportional income tax with a rate of 15 per cent.

The next path leading to success, and one on which we have a great many battles ahead, is the establishment of a dual training system. This means bringing an education system that is far removed from European economic reality closer to that economic reality. The aim is to ensure that at the end of their studies students do not discover that, while the knowledge we have given our children may well be fine, noble and valuable in theory, in reality it is utterly useless. Europe’s school and higher education systems suffer from this phenomenon. The only way to solve this problem is by descending somewhat from our refined intellectual heights, and bringing the school and training system closer to the oil and sweat of the real economy. This, perhaps,

accounts for a major part of the Germans’ success. In other words, jobs instead of benefits: every Hungarian must be given the opportunity to work.

And, finally, the policy of eastward opening also forms part of the Hungarian recipe, the Hungarian model. After 2008 we Hungarians took the view that Europe was unable to grow by itself: there would be no economic growth if we only trade with each other, without opening towards the East. This sounds fine, and it also sounds simple, but there is something here that the Europeans must understand. We cannot simply decide to open economically towards other countries to the East–say towards China–and then every morning proceed to lecture them on human rights. That is not how it works. It is simply untenable to expect the kind of alliance in which we seek access to your market, and we want your economic cooperation, and we also ask you for investment, but we do not at the same time give you the very level of respect that is due to every single independent nation in the world. Such an approach only results in an opening towards the East which exists at the level of rhetoric, but not that of reality.

At the heart of eastward opening lies respect, and those who do not accept that respect takes priority over ideology will never be able to open to the East, because they do not understand the peoples of the East. In this respect, we are luckier, because we are an eastern people which was infused with Christianity; and this gives us a special perspective, enabling us to understand all that is happening in China. Furthermore, since we are talking about a disciplined country, we also understand why they do not respond to criticism from the West, which should instead recognise the achievement represented by, say, the success and value represented by the masses of people lifted out of poverty and hopeless economic situations.

From a moral point of view, this is the most important argument China can cite in its own favour. If we do not accept this, there will be no eastward opening; there will only be trade, which is not the same as eastward opening.

Hungary strives to achieve eastward opening.

Ladies and Gentlemen, Thus, the Hungarian model comprises four elements: political stability, strict fiscal policy, a workfare society and eastward opening. With due modesty, but also appropriate self-confidence, this is what we can present to the world for consideration.

Thank you for your attention.

(For the transcript of the speech visit www.orbanviktor.hu.)

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BREXIT A MILESTONE IN THE NEW THIRTY YEARS’ WAR 48

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BREXIT – A MILESTONE IN THE NEW THIRTY YEARS’ WAR Author: György Matolcsy – Governor of the Central Bank

It is not a momentarily symptom of crisis: the significance of Brexit is much greater than what we would think. The interests of the USA prevail, and Europe is on the verge of complete realignment. Hungary, smartly balancing in the battle of major and middle powers, must renew its own national strategy.

What Brexit has made visible and perceptible to anyone now, started around 2000. In the year of the turn of the millennium, the think tanks of the USA raised a question, ‘are the European Union and an integrating Europe still our friends?’ The answer was no, they are not anymore. The European Union, introducing the euro in 1999 and recommending it as a common global currency to replace the dollar, is not a friend of the USA. And if it is not a friend anymore, then (according to the mindset prevailing in the USA, which distinguishes between two different type of relationships, namely friend or foe), it can be only one thing.

Thus, Brexit was decided in 2000. As a matter of fact, we could say it was rather decided in 1620, when the passengers of Mayflower, which transported the first group of English Puritans, disembarked in Cape Cod, under present-day Boston, but that is not the case. The process that the British themselves identify as the immediate cause of Brexit started centuries later, around 2000. And this is the fact that between 2000 and the spring of 2016 a great many of people, 8,000 of them, settled in the United Kingdom.

The causes of Brexit also include that Calais, France – on the other bank of the Channel – had become one of the most significant cities in the months before the British referendum. The fact that either Brussels or Berlin or Paris did not yield could also play a role in Brexit. The United Kingdom was not granted any concessions. There was no transition. They could leave out of things, but they could not stay in the Union. It is rather odd.

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But let’s get back to the real, more profound reasons, the strategy of the United States, which we know very well, since George Friedman described it completely clearly. The former strategy was renewed around 2000: instead of a European integration, it focussed on the disintegration of Europe. The first goal is to get rid of the euro, the second – if the first one failed – is to dissolve the European Union.

Why? Because the euro is in the way of the dollar, the world’s dominant currency. But it is an even greater threat that the euro and the renminbi, that is, the European and the Chinese global currencies merge and these two together exceed the dollar reserves in the currency baskets of all central banks and financial institutions. It was the America strategy, changed at the turn of the millennium, that sealed the European Union membership of the United Kingdom.

THE CENTURY OF A DUEL The question automatically arises: is Brexit final? Nothing is final in politics. Furthermore, this referendum was not a decisive one, the rates of leave and remain votes were just 52 and 48 percent, respectively. But in Britain, with no written constitution, such a referendum is regarded as a decision of constitutional significance. if we look at age categories, the majority of voters aged 35 years voted to remain, and youngsters under 25 absolutely stood by the EU membership, and the great majority of voters over 60-65 voted for leaving. We could conclude that Brexit is still wavering. But it cannot be wavering because from the viewpoint of politics,

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BREXIT – A MILESTONE IN THE NEW THIRTY YEARS’ WAR

the decision cannot be altered: only in 25 percent of parliamentary constituencies was a majority decision made to remain, but in 75% of them Brexit won. Thus, we must reckon that Brexit will take place. The modified great American strategy will reap its first spectacular victory in the 21st century, since the first significant step to dissolve the European Union has been successful. Brexit is the least about the United Kingdom; it is basically about the United States, and the duel between America and China. In the 21st century, the duel between America and China may determine the face of the century, and it has entered a new phase with Brexit.

Financial impacts are widely considered to be the most remarkable. 44 percent of British export is directed to other Member States, but it will not cause them difficulties. They will enter various global agreements, maybe sooner than anybody else. The British will get along even in the medium term, and in the long term, they will benefit a lot from Brexit. And Scotland may choose the Union, since it would be difficult for it to be a member simultaneously in two integrations.

This is a significant implication for the American Empire, because after 2003, Afghanistan and Iraq were

not spectacular, great victories – to say the least. In addition, the steps taken to eliminate the euro have failed. They did not succeed in making Greece exit from the Eurozone, despite great pressure. In the meantime, they did not succeed in preventing the number of Eurozone members from increasing from 17 to 18. The European Central Bank defended the common currency from the attacks. Thanks to Brexit, however, the United States have reaped its first spectacular great victory in the major duel of the 21st century – and maybe also in the second Thirty Years’ War taking place between 2003 and 2033.

After the first spectacular victory, it is worth considering what else may come next. If you won a major battle, you might have found the key to winning the next battles. From Hungary’s viewpoint, it is particularly interesting how the great overseas strategy, which is the essence of the duel between the American Empire and China, has been modified. How does Brexit affect the process which makes the world’s economic, financial and power focus shift from West to East? In this context, what can be the shared future of the United States and the European Union?

Share of global GDP, 1820-2030

Source: Central Bank of Hungary

A THOUSAND-YEAR-OLD AMERICAN EMPIRE? Share of global GDP, 1820-2060

We are familiar with the great American strategy. It was created by the Masonic American political elite, including Masonic presidents, in the 18th century. Their aim was to seize and maintain global power in order to – and here comes their mission – build, spread and maintain a liberal order in the world. It is an enlightened idea: the target system of liberty and light. Naturally, an empire is subject to change, and does not necessarily retain its original goals, but these are the initial goals of the United States.

In addition to the mission, the USA also has a vision of the future, namely, to build an empire working for a long time, like the Roman Empire was, which existed from 510 B.C.to 476 A.D, that is, almost for a thousand

years; or Byzantium, which, again, existed for a thousand years. But there is Egypt, with a history of several thousands of years; or China, the giant of the Far East.

What strategy was needed to build the American Empire, and what should be modified? Three plus one elements constitute the American strategy, according to the political think tanks concerned.

The first goal is to take and maintain supremacy over seas and oceans. The step preceding it was the Monroe Doctrine in 1823: America for the Americans; an attack against the north from the south should be prevented, as well as an attack from the seas and oceans against the new empire, the centre of liberal order, the United States should be prevented.

Source: Central Bank of Hungary

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BREXIT – A MILESTONE IN THE NEW THIRTY YEARS’ WAR

Source: Central Bank of Hungary

The second strategic goal was the hegemonic possession of the ocean of money. For this purpose, the Federal Reserve, established from the alliance of private banks in 1913, developed the dollar into the global currency, and has managed to maintain this role up to this day.

The third strategic goal was the hegemonic possession of the oceans of global information. Anglo-Saxon countries receive loads of information from the satellites orbiting above us; this information is processed and stored in vast data banks And there is one, additional goal: to maintain the relative advantage on the global economic scene. It does not mean a hegemonic role, but primarily, the task is to maintain the 23.3 percent rate in the world’s GDP. And this requires continuously rebuking countries threatening the leading role of the United States of America in economy. And this relative global power is threatened at times. This was the role of the two great oil price shocks between 1973 and 1977, and the financial crisis in South-East Asia between 1977 and 1979, and in Russia in 1998. But even the European Union is not a friend anymore, because it threatens the relative economic power of the United States.

STRATEGIES BASED ON FEARS

Source: Central Bank of Hungary

“Three plus one elements constitute the American strategy.

China also has its own great strategy.”

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China also has its own great strategy, with which, although not as clearly as with the American one, we are also familiar. The goal is to recreate the middle empire under heaven. Until 1820, China and India were the two most powerful states of the world then.

Now both aspire to this role again.

China has chosen the way of peaceful rise, based on the principles of Confucius, Sun Ce and Laozi. It primarily means avoiding war at all means. Germany was stopped with war by the Anglo-Saxon powers between 1914 and 1928; otherwise, Germany would have been the British Empire in a couple of decades.

The next element of the great Chinese strategy is the Silk Road. Its concept was devised and eventually disclosed in 2013. It must be an accident but Chinese leadership was developing the concept when the new thirty years’ war of the 21th century began first with the Afghan and then with the new Iraqi crisis.

The Silk Road is a smart concept. It encompasses 64 countries. It has three different branches: a northern one, which did not exist in the Middle Ages, a middle one and a southern one. There is a continental, a railway and a maritime Silk Road.

Source: Central Bank of Hungary

The new Silk Road affects two-thirds of the population of the Globe, and 40 percent of the world’s GDP production. Countries not lying on the Silk Road have more power and wealth now. But this may change in the future, because the Silk Road is the concept of a peaceful rise. And finally, the method of follow and overtake is also included in the strategy of China.

Beijing thinks the West must be followed because it defeated the East: decomposed China, colonised India, brought Japan to its knees. It must be followed, learned from and overtaken.

The strategies of both global powers are based on fear. The American Empire is afraid of the future, of the emergence of Eurasia, a contiguous Eurasian continent, a unified continental power. There have been several such attempts in the last 500 years of European history. The role of Napoleon can be mentioned in this context. But the European Union can be considered as such an attempt, about which we should talk about in past tense, because Brexit has prevented the establishment of a potential European Empire, and without a unified Europe the Eurasian Empire is not possible, either.

China is also afraid, but their fear is not nurtured by the future but the past. The people of the Far East are afraid of being isolated, of being held back, and the Empire being falling victim to conquest, which has happened several times in history, despite the Great Wall, which is visible from space but does not provide sufficient defence.

EUROPE DIVIDED INTO ZONES By considering American fears, we can conclude that today the euro, the Eurozone and the European Union are considered the rivals of the United States. If the dissolution of the euro failed, the European Union itself should be terminated. But the European Union disintegrates if – after Brexit – another major state leaves the community by means of a referendum. In the same manner, the euro will be abandoned if a major state opts out of the common currency. Which political power is trying to facilitate this? The extreme right. According to their views and ambitions, the endpoint of migration, changing the societies of Europe, is the referendum.

Source: Central Bank of Hungary

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BREXIT – A MILESTONE IN THE NEW THIRTY YEARS’ WAR

CHAOSLAND This area is the biggest focus of conflicts, terrorism and disintegrating states.

SEA BORDER The clash separating the NATO from Russia and the Baltic Sea from the Arctic Ocean

CLASH AT THE MEDITERRANEAN SEA The conflict zone between the World of Order and Chaosland.

RUSSIAN FEDERATION CHAOSLAND

UNITED STATES

NORTH KOREA SAHEL ZONE

WAR ZONES IN THE WORLD

CHINA

Conflict between Russia and the NATO

CHAOSLAND

Syrian - Iraqi Civil War

2. Levantine conflict

Boko Haram uprising (Nigeria, Nigel, Chad, Cameroon)

CH

AO

Afghanistan War Kurd-Turkish War (Turkey, Syria, Iraq)

Lybian Civil War

AN

D

D

SLAN

CHAO

ND

Drug War

SLA AO

Islam uprising in Pakistan

CH

Somalian Civil War

3. China Sea Conflict

SL

Yemen War Uprising on the Sinai Peninsula South Sudanese War Ukrainian Civil War Kashmir War Balochistan War (at the border of Pakistan and Iran) Mianmar War The conflict between the Colombian Government and the gorillas Israeli - Palestinian tension Northern Mali Civil War Instability in the Sahel Zone

Ogaden conflict (Ethiopia) Central African Civil War War in the Democratic Republic of the Congo Burundian War Islamist rebel in the North Caucasus

MAIN ACTORS: UNITED STATES OF AMERICA 2. RUSSIAN FEDERATION 3. CHINA

Jinjiang Rebel (China) War in Darfur Indian local conflict (in Andhra Pradesh and Chhattisgarh states)

(with the participation of Islamist groups and desert mafias)

Islamist uprising / separatist movement in the Philippines and Malaysia

The Libyan cell of the Islamic State

Drug War (between the logistics bases of Mexican drug bands)

SUPPORTING ACTORS: GERMANY TURKEY

The referendum about remaining in the current Union. In England, in the United Kingdom, this recipe has worked. in these days, disintegration instead of integration is an integral part of the American strategy. Instead of a unified European Union, Washington would welcome a Europe divided into various groups, or zones, whose operation, in line with American interests, would be easier to build on the basis of the principle of divide et impera – divide and rule. If it happens, if the different parts of the European Union can be handled separately, it can be re-integrated into the West, and the West can consistently act against the East. And the strategy based on the duality of Western Europe and Eastern Europe is not unprecedented in history.

If we look at Brexit from this angle, we can see that a reverse Anglo-Saxon integration has evolved. It was the War of independence that ended the integration of Great Britain and its American colonies.

Now the United Kingdom could be the 51st state.

This is unlikely to happen now, but an Anglo-Saxon alliance is probable to be formed. Regarding population and economic power, it would be roughly the same as the European Union will be without the United Kingdom. Basically, two integrations with similar significance may be achieved after Brexit.

In its altered strategy, the U.S. have also acknowledged that, outside the two most important global focus areas, setting up social-political structures built on internal balances is a good solution. It has special importance to the United States. This the reason why Washington has peacefully settled the ignition points in Cuba and South America, and has created a peculiar balance between four countries, Iran, Turkey, Saudi Arabia and Israel, in the Middle East. The American Empire uses this method in other parts of the world, too. But there are two areas they cannot let go: one of them is Europe, and the other is Northeast Asia, that is, China, Japan and South Korea.

FEDERATION OF EAST CENTRAL EUROPEAN STATES What are the consequences of all this for Hungary?

I think it is worth examining thoroughly the Hungarian national strategy, which evolved in the 1980s and is still alive and successful. The national strategy should be summarised in eight bullet points; let’s see them one by one.

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Source: Central Bank of Hungary

The Atlantic integration, our NATO membership as well as our EU membership have been achieved. We have done whatever we could, and are still doing it every day, to unite the nation across borders. The integration with neighbouring V4 countries, the opening to the east and the south are continually developing. Our economic catching-up process is successful because since 2014, Hungary has been on an upward-directed trajectory.

Demographic turning point: it has commenced, but is yet to happen. The situation is similar in Hungary’s healthcare system, too. But several of the eight elements of the national strategy above are not valid anymore. I think – without being exhaustive – we need to look at the new elements that would be needed.

Our starting point should be that the new American strategy wants to build four groups of countries replacing the European Union in the next 10 to 15 years. One of these is a group evolving with its centre in Britain and with the participation of perhaps Portugal, Spain or probably Denmark. The second one is a Scandinavian group, which is quite apparent also from a geographical point of view. A so-called middle group can form, including Germany, France, Italy and Austria, which – perhaps together with the Benelux countries – will remain the core of the Eurozone. And,

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BREXIT – A MILESTONE IN THE NEW THIRTY YEARS’ WAR

as a fourth group, the federation of East Central European states may be established, with the participation of Poland, Slovakia, perhaps the Czech Republic, Hungary, Romania, Serbia and the Balkan. Many of the steps ensued by the dissolution of the European Union indicate such federation of states.

Therefore, the Hungarian government should enhance and even more intensively continue the policy, launched by the current Prime Minister, focussing on neighbouring and V4 countries. The future for us may be a federation of East Central European states. Profound social, cultural, educational and human integration is required, for which Poland is a role model.

On 16 February 2016, Poland disclosed a new concept

of the second hundred million euros. It may give us weight in the federation of East Central European states. I think, for this purpose we basically need to change everything that we think of development policies, investments or strategic development completely.

of economic development of €250 billion for the next 25 years, operating an investment rate of over 25 percent. The concept has five focus areas. The first one is re-industrialisation – they have learnt a lot from Hungary. Strengthening and developing Poland is a very important interest from our viewpoint as well.

Furthermore, growth based on balance between the two distant major powers – the American Empire and China – as well as the two nearby medium powers – Germany and Russia – is also our priority interest. One of them alone would be capable of crushing us. If we analyse the fall of Transylvania after the first, 17thcentury thirty years’ war, we can see that it was the matter of one single bad decision: György Rákóczi II attacked Poland without authorization from the Ottoman Empire in 1657. Today, such a grave national mistake cannot be made. The two major powers and the two regional medium powers, and in addition, many others do not allow us to do so.

Further growth of the Hungarian economy is required, that is, doubling the gross national product, the GDP

me’, responded the emperor. The peasant opened the board consisting of 64 squares, told the rules and the emperor grew fond of the game. ‘You can ask for something about your chessboard, as you call it.’

There was only one thing the peasant asked for. ‘My family is starving. Although I have invented the chessboard, I do not ask for anything else, Emperor, but to put one grain of rice onto the first square, two grains onto the second, four on the third, as so on.’ The Emperor was amazed, ‘Ask for something greater. This is nothing.’ But the peasant insisted on his request. They got as far as the 32nd square, where the Emperor of India had to hand over so many grains that are grown on a medium-sized rice paddy. From this point on, the story has several different endings. There is a version in which the peasant is immediately beheaded, because it has been calculated that there would be great trouble around the 33rd or 34th square, and the pile on the 64th square would dwarf Mount Everest, and it is more rice than has been produced in the history of the world.

WE ARE ON THE THIRTY-THIRD SQUARE For a better understanding, I would recall an old, edifying story. Once a peasant, with the first chessboard of the world under his arm, pilgrimed to see the Emperor of India. ‘Emperor, I have invented something’, he exclaimed when he was allowed to see the ruler. ‘Show

We are standing on the thirty-third square

I wonder if it is a mere co-incidence that there are exactly 64 states, including China, along the Silk Road.

I do not know; but we certainly live in a similar, exponentially growing and changing age. Those engaged in the brain revolution say that the second machine age has arrived. The first one multiplied the physical strength of man. The strength of hands and feet were multiplied by the steam engine, for example, and that is how the industrial revolution began. There had been steam engines earlier, too, but they had utilized only one percent of the resource of power. Then a new invention came, which was capable of a performance of 3 percent. And this revolution of 300 percent started the development of the last 250-300 years.

Source: Central Bank of Hungary

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More than fifty years ago, in 1965, the calculation and observation called Moore’s law was written down.

According to Moore’s law, information processing capacity exponentially develops and doubles every 18 month. This process has been going on ever since.

At the moment, we are standing on the 33rd or 34th square of the chessboard and we do not know what will happen. Therefore, we have to prepare by re-considering everything: the complete Hungarian national strategy, the operation of the Hungarian society, politics. We need to renew everything to become a strong country in the federation of East Central European states.

The article is the edited version of the presentation delivered in Kötcse, on 11th September, 2016.

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GEOfusion

Norbert Csizmadia’s presentation at the book launch of Geo-Moment on 3 November 2016

Seeking the answer to the question who the winning nations, communities, leaders and powers of the current era will be, the book Geo-moment guides readers in the global world of the 21st century by means of maps. The task of the explorers and geo-strategists of the 21st century is to give guidance on the world full of global economic and social challenges. New maps are required, which incorporate the wisdom and the tools of the old ones, but are complemented by today’s knowledge.

It answers the question how we can anticipate global processes on the basis of the latest geographic and economic interrelations.

GEOGRAPHY IS A TOOL TO EXPLORE THE WORLD

MAPS ARE IMPORTANT

My book enquires into the main drives of the major geopolitical and geo-strategical challenges of the 21st century, and turns to geography for an answer. For me, geography is a tool to explore the world, since ge-

In order to understand the processes of this new age, we need maps. Maps are important! Maps are continually changing, developing, but their meaning and their significance remain unchanged. Maps used to

Parameters are important at each birth. The book Geo-moment was born with 1,500 grams, it is the size of an iPad, although it is thicker: it has 408 pages, 6 parts, 24 chapters and a summary with a “geo-manifesto”. The book, which includes 100 exciting and spectacular figures, maps and infographics, seeks the answer to the question what our world in the 21st century is like. This book is an essential collection and selection of the professional work carried out in the last 5 years.

Countries possessing knowledge, i.e. knowledge-intensive economies located in the old peripheries may be the new landmarks. It requires new perspectives, extensive knowledge and creativity, since we live in the age of fusions, networks and geo-economics.

In the Tacitus Lectures event held in February 2016, Paul Tucker, former Deputy Governor of the Bank of England said that such nations and countries would be competitive which aligned their monetary and economic policies with their geopolitics.

If the genre of the book was to be presented with two words, I would say it is a special guidebook; if with ten words, I would say it is a special guidebook to explore our world in the 21st century. It is a guidebook because it builds upon the thoughts of the latest and most important books, mems of thinkers, different places, and guides towards the unknown future. When the manuscript was finished, the cover was ready, and we had the title – Geopillanat in Hungarian -, we realized if we shuffled the letters of the title we got Lonely Planet, the world’s leading guidebook… thus the definition of the genre was obvious.

WHAT MAKES THIS GEO-MOMENT SPECIAL?

The book places a map and a compass into the hands of the readers, and, just like in the case of a guidebook, you can open it at any page, still, everything converges by the end. It is about the moment – the geo-moment in which we live, which is nourished by the past, which creates in the present and builds upon the future.

The main question of the book is who the winners – nations, leaders, communities – of this special geo-moment will be. Will they be the small ones or the large ones; the strong or the fast; centres of peripheries?

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The 2008 economic crisis created a new world order, a new value system, with new participants, new co-operations, new places; former centres got to the periphery, and former peripheries became centres.

Earlier recipes and dogmas have failed; we need a new mindset and new methods. The 21st century is the era of knowledge, talent, technology and innovation, the currency of which is ideas and innovations. After the age of globalization, the age of technology has set in, and the main question of the book is what role places will play in this technology-driven age. If we merge technology, knowledge and geography into one word, the main question of the book is: how to navigate in the age of tech-knowled(ge)ography?

ography does not just mean memorizing places on our maps, but the knowledge of geography implies a complex exploration of the world. Not everybody thinks the same, though. At the end of the 1990s, Richard O’Brian wrote his book Global Financial Integration: The End of Geography, which is about the role of geographical space in our globalized world. He thinks, thanks to modern information technology, millions of dollars can be transferred from one corner of the Globe to the other in a matter of seconds. Thus, the future in which “location no longer matters in finance” is not far away. Well, today we can assert that O’Brian was not right. A decade later, the geopolitical guru of Stratford, Robert D. Kaplan focused on the definitive role of territoriality in global processes, with his book The Revenge of Geography, which can be read as a response to O’Brian. In his book, Kaplan argues that we may forget about the power of geographical factors but they do not cease to exist. Even technological development is incapable of it, although many thought so; technological development has not brought about the death of geography, but attributed a higher value to the significance of geography. Although his approach is slightly different, Thomas L. Friedman, author of the great book The World is Flat has a similar opinion. In 2013, he claimed that in our world we should not talk about developed and developing countries, but countries which are inspiring. These are the countries that will matter in the future.

be important in the past, and will be important in the future. In the 8th century A.D., the Polynesians drew a map with the help of which they got to more than 1,000 islands within the triangle anchored by New Zealand, Hawaii, and the Easter Island. They knew the stars, the ocean currents, the sea routes. They made their maps by hand. They placed seashells on the junctions, representing islands, and this is how they navigated for centuries. But portolan charts made by European sailors were just as important maps; they described major places and ports in as many details as possible, and these maps meant the cartographical basics of the European explorations one 1-2 hundred years later. Or the mosaic map found in the city of Madaba, Jordan, made of two million mosaics in the 5th or 6th century A.D., and containing the complete geographical description of the globalized world.

But what are our maps today like? If we look at the topography or the political-economic map of the Earth, the continents and the boundaries of countries are marked. This new way of thinking is supported by maps because if we look at the world from a different angle, we can adopt a new kind of viewpoint: what does our world map look like viewed from the perspective of Asia or the Pacific? What would it look like if we created our map on the basis of the routes of the world’s 182 airlines, outlining major economic hubs; and the same can be read from the network charts of the world’s cities. If we look at Joel Kotkin’s map, we can find an exciting theory. In his article entitled The New World Order, the American geographer divides the world into 19 regional tribal alliances, each expressed by a shared history and culture.

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geofusion

We live in the age of fusions and networks

WHAT WOULD OUR WORLD LOOK LIKE IF IT WERE A VILLAGE OF 100 PEOPLE? When the world’s population reached 7 billion in 2011, 100people.org repeated the study carried out in 1990 by a pioneering American environmental scientist, Donella Meadows (1941–2001). She likened the world to a village of 100 people, representing the distribution of the world’s population by gender, age, culture and ethnicity.

Business Insider, however, examined the question from an interesting approach: what would happen if the world’s population decreased to 100 people? In this case, 50 women and 50 men would live, 26 would be children and 74 of them would be adults, only 8 of whom would be 65 and older. 60 of the 100 people would live in Asia, 15 in Africa, 14 in America and 11 in Europe. 51 people would be urban dwellers, 13 would speak Chinese and 5 would speak English as their first language. As for religion, there would be 33 Christians, 22 Muslims, 14 Hindus, 7 Buddhists, 12 people who practice other religions. 48 of the 100 people would earn less than $2 USD per day, 77 people would have a place to shelter them from the wind and the rain, but 23 would not. Only 7 would have a college degree, 22 would possess or share a computer, 77 would use a cell phone and 30 would be active internet users.

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This outlines the map of cities and population density – with an Asian hegemony, and interestingly, if we examine the scene of 21st-century technology, innovation, patents and inventions, again, this region is the most predominant: Singapore, South Korea, Japan and China. Another predominant scene appears on maps: the Central European countries, called the new Europe. We can also see on 21st -century maps that invisible borders appear. In Europe, we are looking for the border of the Eurozone, of the European Union, or of Europe and of Central Europe. Yanko Tsetkov has created 20 maps on which Europe is divided by invisible boundaries.

AGE OF GEO-ECONOMICS It is a major geo-political element of the 21stcentury that a new, multi-polar world order is emerging from the former, mono-polar one. It has three main protagonists: the United States, China and Russia; and two supporting characters: Germany and Turkey. Geo-economics, as a fusional meeting point of economics, social sciences and geography, determines the processes of world economy.

Today, we are witnessing the rise of geo-economics; a competition taking place in the language of commerce but according to the logic of wars. Geopolitical competition transforms global economy, the

The map of exploring the 21st century

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geofusion

at Hungary. The Silk Road used to be important in history because it transported the most important technological innovations and knowledge of the age, and quality products were exchanged.

WE LIVE IN THE AGE OF FUSIONS. We live in the age of knowledge, in the age of geoeconomics, in a world of fusions. We can find fusions in gastronomy, music, science, architecture; fusions are important because something completely new can be born from encounters at the most unexpected places. In terms of gastro-fusions, we can talk about a fusion if the East meets the West. And in this fusional age, in this geo-fusional age big data will be the raw material of the 21 st century; knowl-

global balance of power and governance. Before the financial-economic crisis, geopolitics had a local role; in these days, however, conflicts between major powers have flared up again. The conflicts between the West and Russia, China and its neighbours, as well as the crisis of the Middle East, are becoming increasingly manifold and multi-faceted, are the most prominent ones.

Although several wars are being fought in the world, from Damascus to Ukraine, nowadays economy is considered the most important battlefield. Military strikes are replaced by economic sanctions, military alliances by competing commercial systems. Currency wars are much more probable now than territorial conquest, and manipulating the price of certain raw materials (such as oil) proves to be more effective than a conventional arms race. Geo-economics may at once mean the antithesis of globalization and its greatest victory. Countries are so inter-dependent and interconnected that the opportunity of exclusion amount to the gravity of an armed conflict. Geo-economic challenges highlight the powerful trends that are reshaping the world and change the circumstances of the competition between countries. All these outline a world in which the possession of power will be as important as the pursuit of profit, accompanied by an intensifying participation of the state; economic

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warfare will undermine economic integration; multilateral systems, instead of becoming global, will regress onto a regional level; the price of oil will be low and volatile, therefor competition will take place for markets and not for resources.

LINKING LINES – THE NEW SILK ROAD There is one more cartographic element on the map exploring the 21 st century which is even more important than borders, and this is the lines extending beyond and linking locations and continents. These are infrastructural lines. In a TED talk, Parag Khanna claimed we have less than 500,000 kilometres of borders, one million kilometres of Internet cables, two million kilometres of pipelines, four million kilometres of railways and 64 million kilometres of roads. These networks will be the most important lines on our maps. It is not a co-incidence that China’s long-term geo-strategy is to shift the axis of world economy from oceans to the mainland again. It intends to regain its former historical, cultural, economic and commercial significance by rebuilding the New Silk Road. It is not a co-incidence that up to date 64 countries have joined the One Belt, One Road initiative, and it is not a co-incidence that with building the New Silk Road, China provides Hungary with a considerable role: three Silk Road networks meet

edge, creativity, experience will be the services; with new participants and from new co-operations the small ones become giants, as start-up companies, start-up cities and start-up nations have demonstrated. In a new Cambrian moment, we are witnessing a new technological-entrepreneurial revolution. If we have to highlight one map from the 21 st century, this would be the map of Internet, with its networks and hubs.

GEO-MANIFESTO – EXPLORERS OF THE 21ST CENTURY “Geopolitics is what makes you hit the bottom, and geopolitics is what gets you out.” The famous saying by George Friedman has become a motto to be followed by each leader in this century. Decisionmakers of the 21st century are the ones who will be able to view the world from a geopolitical perspective, and dare to re-draw the maps. Philip Zimbardo, the father of the Stanford Prison Experiment said, ‘if one person withstands the world, he is mad; if three or four people do the same, it is a standpoint’. If one of our maps is incorrect, it is useless, might probably mislead us, but it is not a typical construction error, though; but three or four of them are the first sign of a paradigm shift. Leaders of the most dynamically growing multinational companies, professors of most successful universities and politicians with extensive international networks of relationships have already tossed their incorrect maps aside, and they are drawing their own system of targets and in-

terpretation onto a blank sheet. Leaders of the world are building a close network with Eastern Europe, India and Southeast Asia to refresh their portfolios with the creativity of small start-ups. In the meantime, China is building the modern Silk Road crossing the Asian continent from the east. The directors of technological giants pay more and more attention to global social issues, putting pressure on such international political decisions such as space race, global warming or migration.

Science has also turned towards geopolitics: urbanism, territoriality, sustainability and social geography are also included in the economic and leadership studies of the University College London. In 2015, Stanford launched its global executive programme of $700 million USD, seeking answers to economicsocial questions, globalization and technological challenges. At the Faculty of Social Sciences of the National University of Singapore, Asia’s best university, economics is complemented by geography, communications theory, psychology and politology.

Similar processes have commenced at Hungary’s Corvinus University. The world’s leading economic, political and knowledge centres intend to redraw the maps of the world, adding their own interpretation kit and legend to them. These metropolitan areas and regions (Boston, San Francisco, Bangalore, Singapore…) intend to become such hubs that are inalienable from the data, knowledge and innovation networks influencing the decisions of the world.

Ultimately, it is always people and the decisions of people that are behind geopolitical turning points.

And those will be the decision-makers, economic, political, scientific and technological leaders of the 21st century who are able to comprehend global connections and create hubs of creativity and information flow around them. Those who are brave, curious and creative enough to draw strength from crises and to reconsider the role of spatiality in global decisionmaking. Those who are seeking fusions and new border areas, may they be physical, natural or scientific.

Those who build personal networks with other hubs and draw strength from the exchange of experiences with other cultures. They will be real explorers, global leaders, pilgrims of dynamic maps who, adopting a geopolitical viewpoint, reshape the world.

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One Belt, One Road

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A HUNGARIAN COMPASS BETWEEN EAST AND WEST Author: Sándor Kopátsy

We, Hungarians have got between the East and the West several times throughout our history. We can even say that we have had to manoeuvre in this situation continuously for 1,200 years. In our times, we can witness the EU seeking direction and the East, led by China, accomplishing unprecedented economic success, while greater social and economic changes have occurred in the past 50 years than in the previous five-thousand years. We must find reference points in this transforming world, and be successful by relying upon Hungarian virtues and using a good compass.

We have been caught between the East and the West several times throughout our history, when western and eastern major powers declared our region a buffer a zone between them. First, we got into the grip of the East and the West when we conquered the Carpathian Basin. We were the first pastoral people heading for the West who met a settled population using a three-year crop rotation in Transdanubia and along the peripheries of the Great Plain; and the foundation of our state coincided with the European semi-barbarian people’s conversion to Christianity.

It was in the 16th century that we became a buffer zone for the second time, because in its war fought against the Hispano-Austrian Empire, it came in handy for the West, conquering the oceans and becoming also religiously independent, that the Turks could threaten Vienna through us. Typically, the Turkish has not yet understood why we talk about a Turkish occupation whereas all they wanted was to put the Habsburgs, the oppressors of Western-European Protestants, under pressure. We played a part in one of the greatest struggles of European history, and protected Christianity against pagan Turks. We were caught between the East and the West in Yalta for the third time. Essentially, the same thing happened in 1944 and in 812: western and eastern major powers declared our region no man’s land. There is an uncanny resemblance, with the difference that it was not the Ottoman Empire but the Soviet Union that could dictate in this no man’s land. Thus, there have been several instances in the last 1,200 years when

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we have become participants in a great European play. Let us examine now the current state of Europe and the East, and what their future economic, social and geopolitical prospects are. Let us have a look at what we can expect from the East and the West.

“In the past fifty years only those countries were economically successful where the behaviour of the population was characterised by puritanism in the West, and a Confucian lifestyle in the East.”

EAST AND WEST RUNNING ON DIFFERENT TRACKS In the past fifty years, only those countries have been economically successful where the behaviour of the population has been characterised by puritanism in the West, and a Confucian lifestyle in the East. Thus, the last half-century clearly demonstrates that success lies in these two kinds of conduct only; only a

puritan West and the societies of the Confucian Far East have advanced compared to the global average, while all other cultures and behaviours are lagging behind. However, the West and the East are progressing on completely different tracks, as international data and analyses demonstrate.

Today, also politicians and economists are beginning to realise that the performance of developed Western societies is just a fracture of what have been achieved in the Far East. We have to come to terms with the fact that even puritan Western societies cannot keep the pace dictated in the Far East.

Economics has not even started to looking into the reasons for Far Eastern successes. These reasons, however, are obvious on both sides.

•T he employment rate of the working-age population is high in the Far East and low in the West. This difference is especially sharp in the bottom quality quartile of the workforce. Western politicians start to perceive now that they are unable to provide employment for low-quality workers, who are not motivated enough to find work.

• I n the far East, savings are very high, while they are very low in the West. No matter how evident it has been for decades, no great importance has been attributed to it.

• I n the Far East there is a strong desire to learn, while it is very weak in a considerable proportion of Western population. The advantage of the Far East in the effectiveness of education is even greater, yet it is not addressed.

The puritan West wants an ever-improving life, but, at the same time, wants to work increasingly less and enjoy more years after retirement. The poorer the people are in the Far East, the more they work, learn and sacrifice for learning. People work considerably more in four former British colonies, and especially in the United States, than in EU Member States. It is sufficiently evidenced by highlighting some figures.

Regarding the number of hours worked annually, Hong-Kong, Singapore and South Korea stand out.

In 2010, the number of annual working hours per worker was in the 2,200-2,400 range. It must be added that this figure was as high as almost 2,800 in South-Korea in 1980. Among the leading economies of Europe, this figure has dropped below 1,500 both in Germany and France in the past 15 years. The number of hours worked annually has been declining most rapidly in the Netherlands and France between 1980 and 2010, by an annual average of 0.8 and 0.6 per cent respectively. In 2014, the number of hours

spent at work weekly was 28.9 in the Netherlands, and 36.1 in France, according to OECD data. These figures alone would be sufficient to demonstrate that while Europe wants to succeed with less and less work, the greater the trouble the Far East is in, the more it works.

ABOUT THE AUTHOR The over-half-century long career of one of the most renowned economists of Hungary encompasses the economic reform agendas and the control of the privatisation process during the change of regime to the creation of today’s novel economic approach. He has been involved in all economic reform agendas since 1953. He was President of the National Planning Office and the Revolutionary Committee of Ministries during the revolution of 1956. Due to his role taken in the revolution, he became an ignored black sheep of the Kádár regime. He has published some thirty books, in which he deploys convincing and modern arguments to support the truth that István Széchenyi proclaimed 170 years ago, ‘The quantity of scientific people is the real power of the nation’. According to his creed, in today’s developed societies, it is no longer capital investment or infrastructure that dooms an economy to succeed or fail but the quantity of highly-skilled, talented workforce.

And a society having adopted this new approach requires such new economics that takes intellectual capital as well as physical capital into account – even bringing talent, quality training and expertise more and more to the fore. His essay submitted to Polgári Szemle (Hungarian journal of social sciences) and his upcoming book is centred around this subject.

If we contrasted the number of years spent in retirement with the number of hours worked rather than with the number of years spent in work, we would have an even more tragic picture. That is because in EU countries the working time has dropped by 10 per cent on average over the past 30 years. It is coupled with a nearly 10 per cent increase in the number of years spent in retirement despite the fact that retirement age has been raised. More typical than anything else is that while in the EU Member States, primarily in the Mediterranean countries, the rate of people retiring before reaching full retirement age steadily grows, in Japan people are happy to work past the

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A HUNGARIAN COMPASS BETWEEN EAST AND WEST

Hours worked per employed person by countries 1980-2010

Source: The Federal Reserve Bank of St. Louis, U.S. Bureau of Labor Statistics

retirement age. Let us now look at the difference between the official retirement age and the actual age of retirement by region, based on OECD figures. We can see that in Japan and South Korea people work longer than they are required to; in the USA they work roughly as much as they must; while in Europe they work less.

Differences in the field of intellectual property, knowledge and education are even greater than in the activity of those participating in producing the national income. Based on educational achievements, all Far Eastern countries are ranked in the top class: only Finland is competitive with South Korea, Taiwan, Japan, Singapore and Hong Kong. Except for Japan, the countries listed are even farther ahead in terms of the percentage of university students studying at world-famous western universities and their academic achievements there. Moreover, the superiority of Far Eastern countries is even greater in terms of the degree to which families support afterschool learning. In these countries, it is quite common that families spare no effort or money to help their children achieve as good academic results as possible. Admittedly, there is no better predictor of future achievements than the quality of education.

The outcome of school-based education is primarily

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dependent on parents’ attitude to the effectiveness of learning. The advantage of the Far Eastern culture is the greatest in this respect.

EUROPEAN DILEMMAS Today cooperation is more useful than exploitation but the crisis of the Eurozone has made it clear that the European Union is walking the wrong path. Instead of being strong, the European Union wanted to become big at any cost and now fails to realise that it is exactly this intention that makes it increasingly weak. Competent officials of the European Union have not yet realised that where there are tensions in the financial world there society is ill and it is not possible to cure this disease by financial means. I would not entrust my money to those who have introduced a common bank and a shared currency for the Germans, the Greeks and the South-Italians.

Essentially, there are three significantly different cultures and, consequently, three different kinds of Christianity in Europe. Of these three, only one, the North-Western one, belongs to the top segment of the world, and this is the way that the French, SouthGermans and Austrians live and behave. In Europe, it is only these peoples that belong to the advanced

West. European Mediterranean peoples have received and are still receiving a huge amount of help from Northern peoples through tourism and aid, and would not have achieved on their own even the level where they are now. Concurrently, Orthodox Christians are increasingly dropping behind.

Currently, the European Union is uncompetitive against the two other giants, the United States and China. The leaders of the European Union have failed to reckon that an economic community cannot be healthy unless the behavioural culture of its population is more or less identical. If the European Union had only expanded up to a point where it can still preserve its relative homogeneity, it would be considerably smaller but significantly stronger today. There was no point in pushing the boundaries of European integration any further.

Ever since I was a student I have had the opinion that the level of social development of every country in Europe can be measured in a coordinate system where the y-axis stretches between Malmö and Athens and the x-axis stretches between Moscow and Seville. To put it more simply: “Tell me how strong the effect of the Gulf Stream is and I will tell you at what stage that country is.” That is the logic on which my book entitled Towards the West has been based. This book introduces how and why the social and economic development that started in Egypt then moved towards

the North-Western region and, at the beginning of the third millennium, culminated in Norway.

The crisis of the European Union has been made apparent by the exit of Great Britain. From that moment on, the European Union could not remain what it has been since its creation. Or it will revert to what it initially was: the free movement of goods, services and people, which means a free market of goods and services. It can only be realised if the Member States’ sovereignty is preserved. Economists have not clarified to date the prerequisite to the free movement of goods. The free movement of goods and services essentially can operate effectively between states of all kinds of cultures and levels of development if, and only if, the sovereignty of states to change the value of their currencies is preserved. Only those states which are culturally related and have an almost identical level of economic development can have a shared currency. The European Union should be a customs union of free and sovereign states.

The EU was a lame duck with Great Britain but it is even more so without it. This is also true of its role in the world economy but goes even more for its military strength. Europe is not a player in world politics in terms of its military power. NATO essentially means the United States, the other members devote limited resources to this purpose, but even this has no real military significance. Military spending of the

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A HUNGARIAN COMPASS BETWEEN EAST AND WEST

United States has been significantly curbed, from 5.3 per cent to 3.7 per cent in the past 8 years. The EU Member States’ expenditure, except for Great Britain, which exited, remains below 2 per cent and its share is decreasing, except for Poland where it has slightly increased. The lack of Europe’s military power is well illustrated by the fact that the European Union is not a military player without the United States. It must also be added that it is not competitive economically, either, and is increasingly lagging behind.

THE RISE OF THE EAST If we want to see the future, we have to focus on China. This is true from several aspects. China is currently the engine of global economic growth to the extent where its development has a crucial impact on global demand for raw materials. As a result of China’s amazing development, the world economy’s demand for raw materials has grown at an unprecedented pace and, as a consequence, the amount and percentage of mining royalties have also grown.

Such growth in demand for raw materials is unmatched in the history of the world economy. China’s size and speed of growth is unprecedented. The first 200 years of the industrial revolution of the West affected one-tenth of humanity and result in a growth in per capita GDP of hardly 1 per cent. By contrast, China represents one-fifth of the global population and has increased per capita performance by approximately 10 per cent on average in the past 25 years.

It is enough to think about the fact that the industrial revolution was predominantly based on coal and iron ore, and Europe, poor in these two products, was able to meet demand for them until the mid-20th century.

Today, China produces 10 times as much steel as did Europe at the end of the 19th century.

China, however, has walked the classic path of industrialisation in hardly a quarter-century, therefore the level of its demand for raw materials is declining, so in the future the greatest growth in consumption demand will no longer come from mining but from agriculture. Social scientists have been hardly dealing with this shift in demand but biologists have.

Thanks to them, the revolution of producing aquatic animals has begun. We are still at the early days of this revolution but its speed is several orders of magnitude faster than that of the revolution of terrestrial livestock because their potential reproduction, and consequently, their selection, is significantly greater.

The engagement of water, especially salt sea water,

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in production is likely to have a much higher potential than terrestrial areas.

The fact that in the foreseeable future the greatest consumer demand will be for food production has, to the best of my knowledge, been so far realised only by the Chinese. This is no surprise because China, an overpopulated country compared to its arable land area, will be the largest consumer of foods.

Characterised by slow population growth but rapidly growing wealth, China will increase meat consumption but will be unable to produce the forage which is required. Today, it is reflected by China’s being the largest soybean importer of the world. Its leaders have already formulated the idea whereby feeding the population can primarily be organised in Brazil.

China has indicated it with actions, which is shown by the fact that they are looking for opportunities to pursue closer political and economic ties with Brazil.

As an example, it has been announced recently that China has undertaken to build the railway connection between the two oceans in Brazil. In other words, they have already realised that effective access to the Pacific coast with goods can only be possible through a modern and high-performing railway. Seeing such developments, I am saddened to see how mundane and narrow-minded the EU leadership is about Europe’s future, compared to China’s leaders.

Seeing the pace of China’s development, the West should be both more modest and more patient before it expresses criticism. For example, in relation to the natural environment and water management it can be said that China is the best water manager in world history. It has 7 per cent of water resources in the world and supports 20 per cent of the world’s population with that. Despite its limited opportunities, China has increased per capita income and wealth 5 times of the EU average and 10 times faster last year alone.

THE ROLE OF A COMPASS World economy and the power centres therein are undergoing transformation and such transformation always implies conflicts but it also offers opportunities and possibilities. History has proven that ordeals to which a society is subject always lead to greater results if they are endured. What is it that we, Hungarians, can rely on in this changing global economic and geopolitical environment?

Hungarian people are exemplary in their diligence.

Economic success in our present age depends, and

will depend even more in the foreseeable future, on which people can make best use of its time. In the 1980, we were the best of all peoples at using the opportunity to earn supplementary income by work done in our leisure time. In other words, there has never been a people that has relied on enterprises to such an unprecedented degree. Our entrepreneurial spirit is a great virtue.

Hungarians are individualistic and good organisers.

We should not just stress the fact that we arrived here as a pastoral people and were able to establish a lasting state in that capacity but we must also see that we are still bearing its consequences. Pastoral people are inherently characterised by total economic atomisation and, as a counter-balancing factor, an organisational capability based on arms.

Therefore, in their economic interdependence, shepherds also lived in constant fear of others and it was this duality that determined their character. Shepherds were individualists, made excellent soldiers and their leaders were excellent organisers. That is what both our individualism and our desire for unity derive from.

Creativity and the Hungarian genius. As my career led me into the field of economic policy I instinctively turned to the works of Széchenyi, whom I consider a political genius. By my old age I think that his greatest merit was that, ahead of his age by 200 years, he realised that it was not more arable land but more

educated people that was primarily needed. Today we can see that his prophesy has been fulfilled to an increasing degree and the greatest asset is an educated mind. István Széchenyi did not only give crop production areas to the country but also the Academy of Sciences, the Chain Bridge connecting Buda and Pest and, most importantly, a vision of the future.

Just as a small horseshoe multiplies the power of horses, so does a compass weighing only a few ounces multiplies the safety of ships at sea in foggy or overcast weather, enabling navigation far from dangerous coastlines. In my life as well, my compass has been a prerequisite to all my unexpected successes. I have never got lost; I have always realised where political boundaries, invisible to many but life-threatening, lied and could remain within my possibilities. I did not want to live long; I am already 35 years older than I was hoping to be. I contribute it to my good luck, as during the war I was brought on the verge of physical and mental demise many times.

However, I have never got lost amidst the conditions of the country and the world, and survived everything because I have had a good compass. I feel myself lucky because I have lived long enough in an age where we have enjoyed much more progress during a hundred years than for many thousand years beforehand. Events are accelerating and it is especially important to have the ability to orientate ourselves under rapidly changing circumstances.

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The Geopolitical Significance of One Belt, One Road from a Historical Perspective Author: Viktor Eszterhai

The ambitious goal of One Belt, One Road is to change the course of world history by casting Eurasia into the role of the centre of economic, cultural, etc. life again, breaking the century-old dominance of sea powers. However, the changing geopolitical situation prompts the countries of Europe – including Hungary – to re-evaluate their position in the world. For Hungary, a country regarded as periphery for a long time due to its separation from seas, One Belt, One Road presents the opportunity to play the role of the bridge.

The term ’Silk Road’, coined by German geographer Ferdinand von Richthofen in 1877, creates a mystical and fabulous impression in people even today. In fact, the old Silk Road used to be the most extensive commercial network of the world, which, as the axis of world economy, linked the most important civilizational and economic centres on Earth until the dawn of the great explorations. By today, however, its economic and cultural significance has vanished, even though its certain sections were in use until the 20th century. But in recent decades its revival has been on the agenda again, and has been given fresh impetus by Xi Jinping, President of the People’s Republic of China, who placed it officially at the heart of his foreign policy in 2013.

THE OLD SILK ROAD AND ITS HISTORICAL SIGNIFICANCE The old Silk Road evolved from the interconnections of regional commercial routes – mainly marked by the geographical environment (river beds, mountain

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THE DECLINE OF THE SIGNIFICANCE OF THE OLD SILK ROAD AND ITS GEOPOLITICAL EXPLANATIONS

connected. The importance of the great agricultural empires lies in the fact that their agricultural production resulted in a significant concentration of population, creating the most significant market of the world. Their ever-growing cities gave birth to developed and specialised crafts. The Silk Road ensured the exchange of the specialised products of the different regions by connecting markets and producers. The intermediate regions (e.g. oasis towns) also became rich, thanks to trade. It is no coincidence that the major centres of power tried to take control as great part of the Silk Road as possible. However, there was not one power which completely succeeded in this pursuit.

The Silk Road, which was thriving for more than a thousand years, gradually lost its global significance during the great discoveries, and was soon forgotten.

But what lies behind this drastic change? According to a popular opinion, the emergence of the Ottoman Empire was a decisive factor; it successfully conquered the western half of the Mediterranean region.

Although the Court in Istanbul levied grave taxes on long-distance trade, it would not have caused the decline of the significance of the Silk Road. The real

Europe was one, but not by any means the most important, centre of this economic belt created by the Silk Road. In these times, it was not Western Europe but the Mediterranean region and, in particular, the Italian city states (e.g. Venice, Genoa) – playing a much larger part in commerce – which meant the economic centre of gravity in the continent. For geographical regions, the significance of Eastern Europe was also by far greater than today; Hungary could be regarded as an integrated part of the system, through the commercial route of the Balkan, which greatly contributed to its status of being a major power of the age.

reason was that maritime navigation grew stronger, thanks to new technologies, such as the compass, safer ships, etc. The revolution of maritime navigation fundamentally reshaped the geopolitical map of the Earth.

US Admiral Alfred Thayer Mahan explained the advantages of sea over mainland in his geopolitical work entitled The Influence of Sea Power upon History, 1660-1783, published in 1890. Any point in space can be connected on sea. In addition, it is possible to transport a great volume of goods in an inexpensive manner, and thanks to the technical development of maritime navigation, it could be done much more safely from the 16th century. For all these

passes, etc.) – around 2nd century BC. The two central branches of the routes stretched in the east-west direction, connecting the Mediterranean region with China, and in addition, it also reached out to the Hindustani Peninsula, Central Asia and Africa. It is a relatively new discovery that beside the intercontinental transport route, a maritime commercial route existed between China and the Persian Gulf, named as the Maritime Silk Road. Not only did the Silk Road have a commercial and economic role, but it also served as the meeting point of the great civilizations of the West and the East. It was a channel which gave the opportunity to exchange information, thoughts, ideas, religious doctrines, artistic styles and technologies.

The main transport routes of the ancient Silk Road

In ancient times, Eurasia and the closely linked North African zone, in economic terms, basically meant the axis of world economy. The great continental agricultural empires were the centres of the world economy, and they had had very sparse contact with each other before the regional routes were

75

The Geopolitical Significance of One Belt, One Road from a Historical Perspective

features, sea was particularly suitable to facilitate the emergence of the capitalist market economy, at the heart of which lies the exchange of wealth produced according to supply and demand patterns.

Maritime trade could ensure the exchange of surpluses between different regions, on a global level and in a relatively inexpensive manner, and incomparably more cheaply and in greater volumes than the Silk Road, which meant mainly overland trade. As a result, the global capitalist world economy started its conquest.

“The matter of rising maritime trade was closely connected with the question who could exercise power over maritime transport routes.”

The matter of rising maritime trade was closely connected with the question who could exercise power over maritime transport routes. Due to its vast dimensions, the sea seems to be difficult to be ruled.

However, Mahan argued that for geographical reasons one did not need to completely cover the oceans in order to rule them. Maritime trade routes did have critical points (straits, certain ports, etc.). A sea power had nothing else to do but control the strategic points. By establishing naval bases and continually ensuring maritime routes, the way opened to build such an empire whose power exceeded even that of the great continental ones. Naturally, it did not primarily mean the occupation of territories, often just the behaviour of other states was controlled or the acceptance of the rules were compelled.

The profit generated by the exchange of goods through maritime trade and the control over maritime routes gave European countries unprecedented power. First the Portuguese and the Spanish, then the Dutch, and finally the English extended their sphere of influence. Their power resulted in opening the great continental empires and involuntarily altering their traditional social-economic systems.

China in the Quing era was the last victim, and was brought to its knees with the smuggling of opium and

76

minor spot attacks. The British Empire was the first global hegemonic power over the oceans, directly ruling one-fourth of the world’s population. Its power was considerable enough to defend its interests anywhere in the world.

By the beginning of the 20th century the ponderousness of Great Britain had wavered, while other continental powers, such as Germany and Russia, were developing dynamically. As a result of the second industrial revolution (second half of the 19th century), railways were spreading rapidly, transforming the transport links of the world. For the people of the time it reflected the fact that the time of sea powers was over. It is no coincidence that Halford J. Mackinder, challenging the supremacy of sea powers, later regarded as the father of geopolitics and is still one of its greatest representatives today, concluded in his book published in 1919, “Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island commands the world.” Mackinder’s theory reflects on the unity of Eurasia and Africa as a World-Island again, where control over the geographically central area (he named it first as Pivot, later as Heartland) is crucial. Continental major powers, however, could not impose their rule on the World-Island: first Germany (World War I and II), then the Soviet Union failed to do so. It was partly the outcome of the politics of sea powers (Great Britain and the USA), and, on the other hand, the consequence of the inability of railway transport as well as the appearing road and air transport to become a real competitor of sea transport. While railway and road transport had become significant on a regional level, at long distances sea transport remained the most effective way of transport.

Great Britain’s hegemonic status had collapsed by the middle of the 20th century. Its position was successfully taken over by the United States of America. Although the USA – due to its economic potential – has become a leading power in all areas of geopolitics (air force, cyberspace, etc.), its role played in world politics is primarily owing to exercising power over the oceans. In addition, for most of the countries in the world, the power of the USA is not a mere constraint but has numerous advantages.

It is the USA which ensures the global framework of capitalism – mostly at the cost of the US state (global public good). It has become more profitable

to play by the rules imposed by the USA than to take action against them. This is also demonstrated by the example of the Soviet Union and China. While the former one failed to take on the challenge posed by the economic dynamism of the USA, China’s “reform and opening” policy introduced by Deng Xiaoping in 1978, reflected the willingness of the Far Eastern state to play by the rules of the USA. It earned its rewards: China’s coastal regions integrated into world trade extremely successfully, and the fastest economic catching-up process in the modern history of mankind has begun.

“Who rules East Europe commands the Heartland; who rules the Heartland commands the World-Island; who rules the World-Island commands the world.”

77

The Geopolitical Significance of One Belt, One Road from a Historical Perspective

THE RISE OF CHINA AND THE ONE BELT, ONE ROAD China’s extremely successful integration into world trade and the rapid increase of its power resulted in a delicate situation, since it increasingly presents a challenge to the most significant power of the world, the United States of America. The issue is not lacking in piquancy: China has grown stronger and become a potential global major power and a rival just by following the rules of the USA. Since China’s leadership feared that sooner or later the USA would prevent the rise of the country in some form, they exercised remarkable restraint in their foreign policy. It embodied in the foreign policy of keeping a “low profile” in international affairs, launched by Deng, the aim of which was to hide China’s fast growth. The financial crisis of 2008 revealed the change in the regional role of China, and forced the United States, considered to be the leading power in the region since World War II, to act.

The USA came up with a new geopolitical concept in October 2011, which became known as the “Pivot to Asia”. The Pivot made a sweeping change in the foreign policy of the US by the commitment of the Unites States to maintain the status quo in

East Asia as well as its own regional leading role.

Essentially, the Pivot is a geopolitical scheme including military, political and economic goals to balance China’s ambitions. Within the framework of the Pivot, the USA reinforced its alliances in the region, and equipped the states considered to be China’s most important rivals (the Philippines, Japan, Vietnam) with modern military instruments.

It also started to deploy a significant part of its military potential to the region. In parallel, the aim of establishing the Trans-Pacific Partnership (TPP) was also announced, which would mean a free trade zone in the region, excluding China.

With the Pivot, the USA encircled China in such a strategic ring out of which it must break out by any means. China is in a delicate situation: in order to continue its emergence, it still needs a peaceful international environment, and to avoid conflicts with the USA. Since it would need a more powerful fleet to curb the enhanced presence of the USA in its traditional East and Southeastern Asian sphere of interest, China had to seek new opportunities.

This is the aim the One Belt, One Road scheme is dedicated to fulfil, and it also marks the end of the foreign policy of keeping a low profile, and means such an international activity which is on a par with China’s new position of power.

25,000

20,000

15,000

10,000

5,000

78

“…it is a project which aims at shifting the axis of the world economy from the oceans back to the mainland. The promise lying at the heart of One Belt, One Road is to restore the former economic, political, cultural, »historical« role of Eurasia.”

The belt consists of connecting new and existing networks of roads, railways, oil and gas pipelines as well as optical networks, adding cooperating industrial parks, logistical centres and seaports, rearranging the traditional relationships between the production centres, markets and sources of raw materials of this vast region. On top of infrastructure, the programme is completed by commercial, investment and financial collaborations. Similar to the old Silk Road, One Belt, One Road places great emphasis on – in addition to the economic aspect – cooperation in the fields of culture, research and development, and education, providing scholarship and exchange scheme for students, experts, researchers, supporting tourism, etc. The continental belt consists of six “economic corridors” in total, which can be perceived as the arteries of the new economic belt.

Annual GDP output of the USA and China (nominal and purchasing power parity value)

2008

2008

2010

2011

2012

2013

2014

2015

USA

14,719.6

14,418.7

14,964.4

15,517.9

16,155.3

16,663.2

17,348.1

17,947.0

China (nominal)

4,798.6

5,294.9

6,296.4

7,777.7

8,767.3

9,817.9

10,697.9

11,222.6

10,378.8

11,383.4

12,741.5

14,228.6

15,592.9

17,050.1

18,565.0

20,004.1

China (PPP)

According to Beijing’s plans, the New Silk Road (or as it was later named, One Belt, One Road) project launched by Xi Jinping, President of the People’ Republic of China in 2013, would establish such an economic belt encompassing more than 60 countries within one or two decades which would redefine China’s network in Asia, Europe and Africa. The first, large-scale construction phase will coincide with the period of the 13th five-year plan (2016-2020).

What is exactly the New Silk Road? Although the Chinese government firmly rejects that One Belt, One Road is referred to as a geopolitical scheme (according to the official wording: changyi, which approximately means an initiative to act for

common good), in fact it is a project which aims at shifting the axis of the world economy from the oceans back to the mainland. The promise lying at the heart of One Belt, One Road is to restore the former economic, political, cultural, “historical” role of Eurasia. One Belt, One Road claims to be able to connect the economic centres, which are currently mainly connected on sea, via its economic corridors. However, it does not mean a complete refusal of the sea. It is also demonstrated by the fact that the 21th -century Maritime Silk Road forms an important part of the scheme. However, overland links enjoy greater attention, which, from a historical point of view, means a break with the “sea-focussed” era persisting from the 16th century.

In a political sense, with the One Belt One Road scheme China attempts to eliminate gradually the Pax Americana, and to introduce the era of Pax Sinica in Asia.

According to the definition of international relations, the characteristics of a hegemonic power include economic and military power exceeding competitors, and the control over the interstate system via international institutions. China has undoubtedly fulfilled the first criterion within Asia, and we can actually see that the attempt to transfer the international institutional system has also begun. With a start capital of 100 billion US dollars, the Beijing-based Asian Infrastructural Investment Bank (AIIB) has come into operation, supplemented by the Silk Road Fund and the New Investment Bank of the BRICS group, which will also have a currency fund of 100 billion US dollars by 2020. International collaborations supported by China, such as the Shanghai Cooperation Organisation, the Boao Forum, etc., also join in.

However, eliminating the Pax Americana, despite critical tones, will happen gradually, in line with China’s strategic traditions of avoiding direct conflict, and including several elements of the existing system. Pax Sinica will be successful if China manages to make friends as well as allies. However, it is still subject to debate within Chinese leadership, since alliances do not comply with the principles of the foreign policy of the People’s Republic.

Nonetheless, Pakistan, one of the key states of the New Silk Road today, de facto may be regarded as China’s ally.

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The Geopolitical Significance of One Belt, One Road from a Historical Perspective

OLD SILK ROAD 2nd century BC

the geopolitical challenge of one belt,one road As examples from history demonstrated, earlier continental powers were not able to break the power of maritime hegemonic powers. Basically, it had two main reasons: the politics of sea powers and the level of technology, which was unsatisfactory for overcoming geographical factors.

The New Silk Road presents a real threat to the American power-based interests because it attempts to feature China in such regions (South Asia, Central Asia, the Middle East) where the presence of the USA under the Obama administration has weakened, partly due to the new Pacific focus of the US foreign policy. Although the USA itself had launched a Silk Road scheme, its scale is no match for the Chinese one, and it is still not clear whether the American leadership has a strategy to prevent the One Belt, One Road scheme. On top of American positions, the Chinese scheme impacts Russian positions as well, first and foremost in Central Asia. China’s economic presence, which in recent years has intensified in a region traditionally considered as a Russian sphere of interest after the dissolution of the Soviet Union, is further intensified by One Belt, One Road, and Russia, struggling with economic problems due to international sanctions and the low price of hydrocarbons, is increasingly unable to impede it. In addition, the Russian-Chinese relations are continuously improving, primarily owing to Russia’s isolated position after the Crimean conflict. But help from China costs dearly: Russia is increasingly becoming a secondary participant and more and more China dependent.

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For India One Belt, One Road presents opportunities as well as challenges. While it is reluctant to enter the scheme due to the China-Pakistan Corridor and China’s potential appearance on the Indian Ocean, it is still interested in being an active participant of the project because of its lack of capital and infrastructural development.

Finally, also the European Union is given an important role in the Chinese plans. The international order following World War II could be radically changed by joint rapprochement made primarily along economic interests.

Some of the doubts arising in relation to the implementation of the One Belt, One Road scheme - beyond the cultural, political, economic diversity of the region, and often colliding interests – are of a practical-technical nature. Many believe the commercial and trading goals set in the New Silk Road scheme are impossible to reach due to geographical barriers, and, in many cases, security hazards, and it will never be competitive with sea routes in the transport of great volumes of goods. However, the Chinese hope they are in the possession of such financial and technological resources which will enable them to overcome geographical barriers. The Chinese plans do not build on currently available technologies, since they wish to establish the economic corridors step by step, on a time horizon of even several decades.

Furthermore, they do not necessarily wish to provide an alternative to large-scale sea transport, but their aim is to serve the economic needs of the future.

POINT OF INTEREST

NEW SILK ROAD 21th century

FORMATION

8,000 km

15,000 km

DISTANCE How long is that?

DANUBE

NILE

2,860 km

6,853 km

GREAT WALL OF CHINA

FLOOD CONTROL SYSTEM (HU)

6300 km

4220 km

MEANS OF TRANSPORT

2 - 10 Rome - Xi’an

4 years

2 years

EMPIRE/ COUNTRY

50

END POINTS

London - Bejing

35-48 days

(Marco Polo)

1-2 days

21 days (Chinese freight train)

kg

X CAMEL

X

12 3

=

CHINESE FREIGHT TRAIN CAMEL TEAM

= CARAVAN

=

160 - 500 kg

=

max. 4,000 tons

max. 14,000 tons

= X

42 000 81

Siberia

Europe Kirov

Moscow Hamburg

Yekaterinburg Omsk

Novosibirsk

Lille / Brussels Paris

Cologne

Nuremb.

Salzburg Münich Salzburg

Krasnoyarsk Tayshet Chita

Warsaw

Astana

Ulaanbaater Aktogay / Alataw Pass

Pardubice

Vienna

Skovorodino

Chop Budapest

Heihe

Irkutsk

Kiev

London

Northern Corridor

Minsk

Berlin

Rotterdam / Antwerpen

Perm

Yakulsk

Manzhouli

Harbin

Central Corridor

Ürümqi

Samarkand

Istanbul

Tashkent Lop Nor

Khujand (Kokand)

Ankara

Antiochia

Rome

Damaskus Cairo

Teheran

Taxila

Balkh (Bactra)

Xian

China

Mashhad

Bagdhad

Shenyang / Fushun

Lanzhou

Holan (Kholan)

Yerevan Tabriz

Venice

Wuwei

Niya

Changchun

Bejing / Tianjin

Jlayuguan

Sofia

Vladivostok

Erenhot

Turpan

Belgrade Skopje

Tianshu / Guyvan

Lianyungang

Zhengzhou

Xuzhou Nanjing

Shanghai

Wuhan

Basra

East China Sea

Changsha / Zhuzhou

Mediterranean sea

Sevelskaya Gawan

Suifenhe

Saksaulkaya Alterau (New Sarai)

Khabarovsk

South Corridor Karachi

Arab Peninsula

Tamluk

Hanoi

Barygaza

Shenzhen / Hong Kong

Masulipatam

The sixth improvement was to announce and build the Silk Road, i.e. the One Belt, One Road initiative

South China Sea

Bengal Bay

Singarpore

82

83

84

85

AN INTRODUCTION TO THE “16 + 1 COOPERATION” Author: Viktor Eszterhai

“16+1 Cooperation” is a trans-regional platform created to intensify the relationship between China and 16 Central and Eastern European countries. The summit of Prime Ministers involved in the mechanism will be hosted by Hungary in November, 2017, therefore it is worth examining the history of the “16+1 Cooperation” and the peculiarities of its operations as well as the occurring problems and challenges.

ANTECEDENTS During his official visit to Hungary in 2011, Wen Jiabao, former Premier of the State Council of the People's Republic, declared China’s commitment to improve relationships with Central and Eastern European (CEE) countries, and also announced the establishment of a new mechanism for this purpose.

A year later, the platform named “16+1 Cooperation” was formed by China and 16 CEE countries in Warsaw. The 16 CEE countries participating in the mechanism include: Albania, Bosnia Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia, Bulgaria, Romania, the Czech Republic, Hungary, Slovakia, Poland, Latvia, Lithuania and Estonia. The “16+1 Cooperation” fits China’s attempts of recent years to establish new international institutions in order to increase its influence in global politics.

Another important feature of the “16+1 Cooperation” is being part of “One Belt, One Road”, China’s ambitious foreign policy plan.

HISTORY OF THE “16+1 COOPERATION” At the summit of the Prime Ministers of China and the CEE countries, held in Warsaw in 2012, the Member States of the mechanism adopted the “Twelve Measures”, which defined the main goals of the cooperation, with setting up a Secretariat subordinated to the Beijing-based Ministry of Foreign Affairs being the most important one. China

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announced to create a $10 billion special credit facility, part of which can be drawn down in the form of preferential loans to implement joint projects, primarily in the field of infrastructure, green economy, etc. CEE countries can apply for project funding at Chinese financial institutions (National Development Bank of China, Export and Import Bank of China, Industrial and Commercial Bank of China, Construction Bank of China, Bank of China, China Citic Bank). The parties agreed to establish a development fund of $500 million, and the member states planned to increase trade between the region and China up to $100 bn by 2015. The agreements provided for further cooperation in the field of finance, tourism, culture and science, and China promised to grant scholarships for 5,000 students in the region in the next five years.

As the most important outcome of the summit held in Bucharest in November, 2013, the parties laid down that the heads of government of the countries concerned would meet on an annual basis to overview the results of the cooperation and to define the direction of future progress. They also agreed to develop the medium-term programme of the “16+1 Cooperation”. Regarding economic cooperation, a decision was made on holding investors’ and scientific forums, and establishing the chamber of commerce of China and the CEE countries, which the member states can join on a voluntary basis. Several new forums were announced in the

field of science and education (China-CEEC highlevel symposium of think tanks, China-CEEC Young Political Leaders› Forum, China-CEEC Education Policy Dialogue, etc.), and preparing for establishing coordination centres in various fields was also agreed upon. Finally, Hungary, Serbia and China announced to jointly modernise the railway line between Budapest and Belgrade.

At the summit in Belgrade in December, 2014 the parties declared to regard the principles of China 2020 Strategic Agenda for Cooperation and EU legislation as the foundation of the cooperation.

The first large-scale infrastructure project of the “16+1 Cooperation”, i.e. the modernisation of the Budapest-Belgrade railway line, was signed. At the summit, the parties declared to support the establishment of the China-CEEC Business Council in Warsaw, which the regional economic organisations would join on a voluntary basis. a decision was made to form the first industrial coordination centres, the China-CEEC Tourism Promotion Agency in Budapest and the China-CEEC Investment Promotion Agency in Warsaw and Beijing.

In the summit held in Suzhou in November, 2015 the institutional operations of the “16+1 Cooperation” was ultimately consolidated: the Chinese party and the international coordinators prepared the

National Coordinators’ Meetings, during the summit the parties agreed on the place of the next meeting, discussed the goals of the community and reviewed the implementation of earlier plans.

The Suzhou Guidelines emphasised the further strengthening of the relationship between the “16+0 Cooperation” and the EU, identifying the China-EU Connectivity Platform in addition to earlier mentioned forms of cooperation. The fact that “16+1 Cooperation” is handled by the Chinese party as an integral part of the Government’s grandiose “One Belt, One Road” plan was confirmed, therefore the Memorandum of Understanding signed

by Hungary and China was given special emphasis.

In order to strengthen trade relationships, the parties acknowledged to develop the railway link between the two regions, following the example of the already working cargo railway transit between the cities of Łódź and Chengdu. The Cooperation in Facilitating Customs between Greece, Macedonia, Serbia and Hungary was launched in order to transport goods as smoothly as possible from Piraeus Port to the EU (China-Europe Land-Sea Express Line). The parties supported the plan ensuring the cooperation between the Adriatic, the Baltic and the Black Sea harbours and related industrial parks as well as their connection with economic corridors (Adriatic-Baltic- Black Sea Seaport Cooperation). The joint Medium-term Agenda of the

87

AN INTRODUCTION TO THE “16 + 1 COOPERATION”

platform was adopted, ultimately consolidating the fields of cooperation: economy; connectivity and infrastructure; industry and processing industry; agriculture and forestry; science, research and environmental protection; culture, education, youth exchange, sport and tourism; health, and finally local-level cooperation.

The most important outcome of the meeting held in Riga in November, 2016 was the establishment of the China-CEEC Investment Cooperation Fund. The parties agreed to align their infrastructure development with the routes of the Trans-European Networks (TEN-T). The China-CEEC Secretariat on Logistics Cooperation was established in Riga, which received its own virtual platform (www.ceec-china-logistics. org). The parties support the modernisation of the Belgrade-Bar railway line, the second large-scale infrastructure project of the mechanism.

CHARACTERISTICS OF THE “16+1 COOPERATION” The experiences of recent years have revealed that the “16+1 Cooperation” has many interesting characteristics, which distinguish it from other international institutions.

The first important characteristic of the “16+1 Cooperation” is that it is operated according to a consciously loose institutional arrangement. Typically, each country decides to join the work of the mechanism’s organs on a voluntary basis. The mechanism has three levels: 1) forum of heads of states 2) a level related to expert discussions and major fields of cooperation (e.g. infrastructure development, agriculture) 3) and finally, the most important level is represented by a central organ, the Beijingbased Secretariat, continuously liaising with the embassies of the countries concerned (supervising the performance of initiatives and the fulfilment of commitments, summoning meetings, formulating topic proposals). This loose institutionalisation meets the interests and motivation of the participating countries and facilitates focussing on areas serving the improvement of cooperation. Furthermore, it is especially important that it makes the mechanism also more acceptable by the EU, diminishing critical voices according to which China aims at creating its own international institution within the EU. Interestingly, loose institutionalisation–although it is traditionally a characteristic of weak

88

organisations–has an undoubted advantage under the rapidly changing global circumstances of the past decade: it makes the mechanism more flexible and result-oriented.

“The experiences of recent years have revealed that the »16+1 Cooperation« has many interesting characteristics...”

Another characteristic of the Cooperation is a conscious recognition of the heterogeneity of the participating countries. 11 of the 16 CEE countries are Member States of the European union (EU), while 12 of them are members of the North-Atlantic Treaty Organisation (NATO). These 18 countries have very different geographies and histories; their only common historic feature is their former membership in the Socialist Bloc. The recognition of heterogeneity is an imperative for the feasibility of the “16+1 Cooperation”. The fact that it does not force compulsory homogeneity on its member states, however, somewhat increases its efficiency. It is beyond doubt, however, that in the future China–maintaining the present institutional frameworks–should further divide the sixteen countries into internal blocks (Baltic countries, West and East Balkan, Visegrad countries), for the sake of more effective operations.

Third, “16+1 Cooperation” has become such a common regional forum that necessarily brought EastCentral European countries closer to each other.

As yet, this has not substantially decreased the traditionally Western European focus of the region, but, in the long term, is expected to contribute to the strengthening of a kind of regional identity.

Considering the political processes within Europe, its significance in a longer term should not be underestimated.

The fourth characteristic is the dominance of economy, although the Cooperation covers almost all areas of the relationships. The most important aspects of economic relationships are represented by the financial cooperation (preferential loans or

investments) and infrastructure support (such as the Budapest-Belgrade railway line). Typically, the bodies and forums of the economic cooperation are the most active and significant, such as the ChinaCentral and Eastern Europe Business Council and the China-Central and Eastern Europe Business Forum. The focus of the relationship on economic cooperation promotes the result-orientedness of the two organisations. The character of the “16+1 Cooperation” well reflects the pragmatic, less value-based feature of China’s foreign policy, which is also suitable to increase the acceptability of the mechanism within the EU. The fifth characteristic is the planned framework of the “16+1 Cooperation”, which was clear already at the time of foundation (e.g. Twelve Measures), but took an institutionalised form only after the summit held in Suzhou, completed by the medium-term schedule of the mechanism. The typically resultoriented nature od the platform is further enhanced by setting the goals and monitoring progress.

Sixth, the engine of the Cooperation is China, while the CEE countries are unable to adopt a unified stance. On the one hand, this asymmetry is most

discernible in the creation and operation of institutions. China consciously considers the interests of the countries taking a lesser part, but in practice there is strong competition between the states of the region for winning Chinese investments, which is not very likely to change in the near future.

The seventh characteristic is that the “16+1 Cooperation” emphatically does not conflict with the European Union, but even “complies with its relevant laws and decrees”. The “16+1 Cooperation” must comply with the legislation and strategic documents of the European Union (China-EU 2020 Strategic Agenda for Cooperation). It is extremely important to emphasise this to prevent criticism against the mechanism. The 16+1 Cooperation”, however, is not entirely free from political purposes, and is more than merely an international economic institution.

Finally, thanks to the “16+1 Cooperation”, the cooperation between CEE and China fits China’s other new mechanisms, coordinating the state-level relationships between Vhina and other regions (e.g. Chna-Africa Cooperation Forum), which refers to the fact that the Chinese government builds

89

AN INTRODUCTION TO THE “16 + 1 COOPERATION”

its transregional institutions according to a kind of pattern, providing a basis for the operations of “One Belt, One Road”.

ASSESSMENT OF THE “16+1 COOPERATION” In some Chinese opinions, the “16+0 Cooperation” is one of the most important diplomatic outcomes of China’s policy on Europe, which may also serve as an example for other regions (or even the EU).

Other experts highlight that the cooperation has produced significant results within a relatively short period of time, and has proceeded to the next phase of development: while priority was formerly given to creating the institutional frameworks, now giving them substance has become important.

By contrast, some experts believe the feasibility of the cooperation is questionable, due to the different historical pasts and political situations of the sixteen countries. Undoubtedly, the goal set at the establishment of the mechanism, namely to increase the trade between China and the CEE region to $100 bn, has not been achieved: China’s export amounted to $42.2 million in 2015, -while its export form the 16 countries amounted to $14.1 million. The data reveal that trade is still strongly asymmetric, the attempts to make SMEs of CEE countries appear in the Chinese market have proven to be futile.

Another disappointment, primarily for CEE countries, was that no surge of Chinese investments could be observed despite the “16+1Cooperation”.

The lack of green field investments is an especially sore point, which are extremely popular tools of internal policies because of their job-creating capacity. Despite critical voices, however, the “16+1 Cooperation”, is still assessed predominantly positively by the governments of the CEE region, primarily owing to the “One Belt, One Road” project, which is optimistically considered a suitable tool for the region to break out from its semi-peripheric position within Europe through the expansion of trade.

Actually, the greatest danger for the “16+1 Cooperation” is posed by the EU. Although the Cooperation is not a priority theme (in contrast with the issues of trade, investments and human rights, etc.) of the EU-China relationships, according to some

90

leading circles of the EU (and governments of its Member Statesą, e.g. Germany) the region does not need a new channel outside the EU to manage relationships with China. This guideline applies to Member States as well as the five Balkan candidate countries. Within the EU, usually three concerns arise in connection with the “16+1 Cooperation”.

According to the first concern, the joint projects within the framework of the mechanism–especially the infrastructure investments and their form of funding–are in conflict with the legislation of the EU. Those who take this viewpoint think that the projects re not transparent, violate the internal market regulation of the EU (public procurement, environmental impact study, technical standards, etc.). These are the reasons why the European Commission is examining the flagship project of the Cooperation, the modernisation of the Budapest-Belgrade railway line. Second, critical voices claim, the mechanism does not meet European principles and values, and does not follow the model which is represented by the EU in the CEE region. Third, China is trying to drive a wedge within Europe and implement the “divide and rule” principle with the mechanism, critical voices warn. Some extremist views regard the “16+1+Cooperation” China’s Trojan horse. All these critical remarks–may they be exaggerated and partly stem from the preservation of the CEE market–should be kept in view to ensure the further development of the “18+1 Cooperation”.

SUMMARY The “16+1 Cooperation” has undergone significant development, and become an operating transregional platform. The institution can be regarded such a flexible and pragmatic mechanism which, on the one hand, has substantially improved the relationship between China and the CEE region, and which, on the other hand, provides guidance to operate the relationships between China and other regions within the frameworks of “One Belt, One Road”. For all these reasons, it may serve as the model of cooperation between the EU and China in the long term, especially if the USA continues to move away from the EU. All this, however, is on condition that the “16+1 Cooperation” responds effectively to the countless challenges that it is facing.

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The Budapest Guidelines Author: Viktor Eszterhai

The 6th Summit of Heads of Government of Central and Eastern European Countries and China was held in Budapest on 27 November 2017. This analysis aims to present the main events of the “16+1 Cooperation” on the basis of the Budapest Guidelines drafted at this meeting. In the first step, this analysis examines the stances taken in the Preamble, and then it discusses the points adopted by the Member States.

PreambLE The most significant forum of the “16+1 Cooperation” is the Summit of the Heads of Government of 16 Central and Eastern European Countries (CEE) and China, which is arranged every year. According to the Budapest Guidelines,i each country was represented by their Heads of Government, except for Albania and Romania represented with their Deputy Heads of Government. This reflects that the Summit is actually judged as a high-priority regional event by the countries of the CEE and the cooperation has become one of the key political forums in the region.

NAME Orbán Viktor Li Keqiang Denis Zvizdic Boyko Borissov Andrej Plenkovic Bohuslav Sobotka Jyri Ratas Maris Kucinskis Saulius Skvernelis Zoran Zaev Dusko Markovic Beata Szydlo Ana Brnabic Robert Fico Miro Cerar Senida Mesi Paul Stanescu

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Participants at the 6th Summit of Heads of Government of Central and Eastern European Countries and China. 3 Besides these 17 countries, representatives of Austria, Belorussia, Greece, Switzerland, the European Bank for Reconstruction and Development and the European Union were also present as observers. The involvement of these countries and institutions is not a coincidence. 4 Given the heritage of the Habsburg Empire, too, Austria traditionally fosters a close relationship with the region, and the idea of involving the country in the mechanism has

COUNTRY Hungary China Bosnia-Herzegovina Bulgaria Croatia the Czech Republic Estonia Latvia Lithuania Macedonia Montenegro Poland Serbia Slovakia Slovenia Albania Romania

POSITION Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Head of Government Deputy Head of Government Deputy Head of Government

already popped up thanks to the active economic relations. The attendance of Belorussia can be justified for two reasons: first, it also has a close relationship with the neighboring CEE, connecting the region to Russia as a natural corridor. Second, the country itself is also a significant site of Chinese investments. The presence of Greece was not a surprise either: several of its neighbors are active participants of the “16+1 Cooperation”, while Greece is directly involved in one of the flagships of the mechanism, the Budapest-Belgrade railway, as the railway line would connect the Port of Piraeus with the market of the EU. The Swiss interest is due to the tight economic relation maintained with the CEE Region and the potential investment facilities of the “16+1 Cooperation”. The attendance of the European Union is also evident because 11 countries out of the 16 CEE countries are EU Member States. On the other hand, involving the EU in the mechanism as an observer might decrease the skeptical judgement against the mechanism among certain EU decision-makers. 5 The primary interest of the European Bank for Reconstruction and Development is to find interesting projects for investments, coordinating them with the European Commission’s Infrastructure Development Program (European Commission’s Investment Plan for Europe), better known as “the Juncker Plan”6).

The Budapest Guidelines put special emphasis on the Budapest venue of the 6th Summit (Warsaw, Bucharest, Belgrade, Suzhou, Riga), so the five-yearperiod is perfect for checking the earlier results.

This is also reflected by the document listing the results of the five years (Five-year Outcome List of Cooperation Between China and Central and Eastern European Countries). 7 It is important to highlight the results because there are voices 8 that consider that the “16+1 cooperation” has not lived up to the expectations (the best-known example is that the trade between the CEE Region and China should have been increased to USD 100 billion by 2015 according to the plans,9 but it hardly exceeded USD 50 billion at the time of the target date10).

It is no coincidence that the Budapest Guidelines emphasize one should not focus only on economy when evaluating the cooperation because the relations of transport and logistics, culture and the human sector, which already have numerous results, are also important. 11 The Budapest Guidelines highlight that the platform is committed to supporting multilateralism and international institutions such as the United Nations Organization and the World Trade Organization. This is significant because, on the one hand, similarly to the earlier guidelines published

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annually, the participating states intend to ease the anxieties that China’s international institution-building ambitions – as well as the “16+1 Cooperation” – undermine the role of international organizations. On the other hand, this is some kind of determination to the world, mainly in relation to the anti-globalization efforts in the USA, whose losers might be both China and the extremely open CEE Region. It is not by chance that according to the text the “16+1 Cooperation” aims to maintain the openness of the global economy.

The Budapest Guidelines state that the “16 + 1 Cooperation” fulfils an important and positive role in the China-Europe relations and deepens the “comprehensive strategic partnership” between the EU and China” 12 . This is of great importance because of the above-mentioned negative perception that can be experienced at EU decisional level with respect to the 16 + 1 Cooperation”. In light of the sources, criticism primarily has three aspects: the projects implemented under the mechanism do not entirely harmonize with the EU regulations; China’s regional presence challenges the exclusiveness of the Western model in the CEE Region; and finally, the mechanism undermines the unity of the EU. 13 Therefore, the Budapest Guidelines highlight that they aim to establish a “united, stable and prosperous Europe”. To deepen trust, the Budapest Guidelines also state that the 16 CEE countries and China are committed to follow the strategic documents and objectives specifying the EU-China relations such as the EU-China Agenda 2020, 14 the EU-China Connectivity Platform, 15 the European Commission’s Investment Plan for Europe16 and the EU-China Comprehensive Agreement on Investment being discussed. 17 The Budapest Guidelines lay down that the “16 + 1 Cooperation” is closely related to the “One Belt, One Road” plan, 18 which was first announced by Chinese Premier Li Keqiang in Belgrade in 201419 and has been mentioned in the Guidelines every year since then. The “One Belt, One Road” is most popular among the CEE states as the infrastructure investments to be realized under this initiative are supposed to considerably improve the accessibility of the region, which will help them break free from their peripheric economic status. 20 Second, it is essential for China that the CEE countries lay down their commitment towards the “One Belt,

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One Road” because its judgement, similarly to the “16+1 Cooperation”, is rather mixed within the EU, primarily for certain EU Member States such as Germany, so common front may form the EU attitude in the longer run. 21 The Budapest Guidelines has marked the main path to be followed in the future as follows: “deepening economic, trade and financial cooperation for win-win development”. This sentence contains two noteworthy aspects. First, the issue of the financial cooperation between the CEE and China is included, although it received less attention as an economic topic before. This change is primarily due to the fact that Hungary as host country has made the most significant financial progress in the bilateral relations with China, which the parties could assess as a model to be followed by the other 15 countries, too. 22 China especially urges on the deepening of financial relations, partly owing to the central efforts to internationalize the RMB, and partly because it is relatively easy to achieve results in this fields, as the Hungarian example also shows, contrary to the endeavors to increase investment and trade, which are often hindered by the economic structural features of the 16 CEE countries. 23 Second, one of the high-priority elements is the mutually beneficial principle of relations. Over the past years this issue has received considerable attention and criticism owing to the “16+1 Cooperation” for primarily serving the interests of China. 24 Therefore, it is essential to emphasize the mutual benefits for the affected parties. Nevertheless, it is worth mentioning that the Chinese party does not necessarily interpret mutual benefits as equal share from the benefits, but it rather means that the relationship offers advantages to both parties, so China does not exclude that the implementation of a project would be more beneficial to China than its partners. It is also obvious that China is responsible for checking to what extent the CEE countries have their interests in mind (e.g. the feasibility of each project).

Finally, the last article set forth in the Preamble of the Budapest Guidelines lists the above-mentioned norms concerning the “16+1 Cooperation”, including the principle of “transparency, fairness, reciprocity and mutual benefits”, which are entirely connected to the international norms and the EU’s legal provisions according to the document. This point is significant because the parties emphasize

that the “16+1 Cooperation” has not been established to undermine the international order or divide the EU but to exploit the mutual advantages.

POINTS ACCEPTED The 7 th Summit of the Heads of Government of Central and Eastern European Countries and China will be hosted by Bulgaria next year. Up to present, Bulgaria has belonged to the less active countries within the cooperation, which among others is due to its underdeveloped economic relations with China. The high-priority issues of the meeting to be held next year will probably include the Chinese export of agricultural products, because the sectoral coordination center for the “16+1 Cooperation” (16+1 Association for Agriculture Promotion) is located in Sofia. 25 Cooperation Plan and Coordination Concerning the topic of cooperation plan and coordination, the parties have agreed to further realize the purposes of the Medium Term Agenda26 and announced their need for the preparation of the plans concerning the 2021-2025 period, which is highly important for the future of the “16+1 Cooperation” with actual purposes to be implemented. The formalized process of the mechanism has been confirmed again, under which the so-called national coordinators will hold discussions in China in the first half of the year, and then the final decisions will be passed in the host country of the Summit in the second half of the year. No change has taken place in the decision preparation mechanism: the Ministry of Foreign Affairs of the People’s Republic of China prepares the points of the Summit through the Secretariat operating in Beijing, in consultation with the embassies of the countries involved. It is still an important feature of the mechanism that each country and their institutions continue to decide on joining its work on a voluntary basis.

Trade and Investment As for trade, the Member States aim to keep on consolidating bilateral trade based upon the regulations of the World Trade Organization, while for the investments the EU-China Comprehensive Agreement on Investment 27 to be adopted in the future shall apply. Both are significant partly because of the above-mentioned ambitions highlighting that China’s institution-building is not contrary to the

prevailing international order and enhancing the EU’s trust towards the “16+1 Cooperation”. In addition to that, the World Trade Organization is a wellorganized and tested regulatory system that is known to the participating states, so the Organization can enhance the efficiency of the cooperation among the Member States of the “16+1 Cooperation”. However, referring to the rules of the World Trade Organization is definitely an implicit concession for the Chinese party, as it is not the World Trade Organization but the common trade system and policy of the EU that serves as the basic reference point for the 11 EU Members. Although the wording is justified with respect to the five non-EU Member States, it will not be satisfactory for Western Europe and the European Commission.

The key role in coordinating and preparing the economic relations is still fulfilled by the China-CEEC Business Council. The parties support a large number of international exhibitions and events (e.g.

China International Import Expo, China International Consumer Goods Fair). These are considerable for the CEE states primarily because they are provided an opportunity to promote their products towards potential Chinese partners, increasing the export of the CEE countries and decreasing their trade deficit with China, which criticism is often mentioned about the “16+1 Cooperation”. 28 The Budapest Guidelines expressly highlight e-commerce as one of the potential fields of cooperation.

E-commerce may offer mutual benefits: Chinese companies possess the services providing a platform for the small companies of the CEE countries to enter the Chinese and the global markets. Central and Eastern European SMEs, which are dominantly in national property but are often underdeveloped, are expected to be involved in the “16+1 Cooperation”; however, this objective has not been achieved yet in recent years. 29 Actually, both the foreign trade deficit and the low-efficiency presence of the SMEs of the CEE countries arise from the economic structure of the region, so they cannot really be remedied by the accepted points.

Connectivity The Budapest Guidelines confirm that the projects of the “16+1 Cooperation” – besides the “One Belt, One Road” – are harmonized with the relevant documents and institutions of the EU, including the EU-China Connectivity Platform 30, the Trans-

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European Transport network (TEN-T) and the Eastern Partnership31 programs. Beyond economic rationality, another aim is to build trust within the EU, limiting the potentials of hindering the realization of the projects, as it happened during the first significant regional project, the reconstruction of the Budapest-Belgrade railway. In the longer run the Member States hope that the EU will have a more supportive stance, as the projects of the EU and the “16+1 Cooperation” overlap considerably.

Concerning the actual projects, the Budapest Guidelines mentions the Budapest-Belgrade railway, stating that China, Serbia and Hungary took significant steps for its realization. Formally, launching the public procurement procedure for the restoration of the railway section in Hungary can be considered a milestone: a precondition for the implementation. The public procurement procedure was significant because earlier the European Commission had objected to the failure of this. Therefore, after the closing of the tender procedure the former obstacles can be eliminated and the construction may start in 2020. 32 Other actual projects include a plan supporting the establishment of the railway connection between the Ports of Rijeka and Koper with Hungary, and – based upon the recommendations of the feasibility studies – the extension of the Belgrade-Budapest railway line through the Ports of Montenegro and Albania.

The projects are related to the China-Europe Land Sea Express Line and the Port Area Cooperation, aiming to create a modern connection between the Baltic, the Adriatic and the Black Seas. To improve the relations of transportation, the “16+1 Cooperation” aims to make the standard of the connectivity service in the CEE more efficient by harmonizing border-crossing and customs rules, increasing the connectivity of the railway network and supervising the cooperation opportunities of the existing logistics centers. The parties realized that the customs regulations should be harmonized with the EU rules (EU-China Agreement on Cooperation and Mutual Administrative Assistance in Customs Matters, 33 EU-China Strategic Framework for Customs Cooperation34) in order to increase efficiency.

These high priority aspects can reduce the disadvantages arising from the fragmented infrastructure network of the CEE countries and the differing customs regulations of the EU and non-EU Member States. 35

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Cooperation on Industry, Energy, Science and Technology The Member States endeavor to enhance the earlier cooperation in the fields of industry, energy, science and technology under the coordination of Slovakia. The actual measures include the establishment of common laboratories (e.g. the virtual technological transfer center in Slovakia) and joint events such as the 3 rd 16+1 Conference on Innovation Cooperation, which will be held in Sarajevo in 2018. For the reasons described earlier, the Budapest Guidelines have tried to strongly involve the SMEs in the industrial and technical cooperation, so the purpose of organizing a CEE-China International Small and Medium Enterprises Fair has appeared in China.

Financial Cooperation One of the most central fields of the Budapest Guidelines is financial cooperation, which has been affected by the above-mentioned fact that out of the 16 CEE countries it was Hungary that had managed to make the most significant progress towards the deepening of financial relations with China. The second phase of the China-CEEC Investment Cooperation Fund was established, supplementing the first fund of a far more modest extent (nearly USD 0.5 billion). 36 This activity is expected to be extended with the regional investments of the Silk Road Investment Fund, also including the CEE Region taking a central role, mainly in relation to the infrastructure investment opportunities of the Western Balkans Region. The China-CEEC Inter-Bank Association was founded, and the financial institutions of the affected states can join this Association on a voluntary basis. The Secretariat is directed by the China Development Bank, while the establishment of the regional coordination center is managed by the Magyar Fejlesztési Bank.

Hungary’s leading role is shown by the fact that the China-CEEC Central Bank Governors’ Meeting will be organized in Hungary in 2018.

Agriculture, Forestry and Environment Protection Cooperation Undoubtedly, agriculture is one of the most successful fields of the “16+1 Cooperation”: China seems to be a proper market for the relatively cheap and high-quality products. Accordingly, the Budapest Guidelines lay special emphasis on the promotion of regional products (e.g. China Interna-

tional Agricultural Products Fair, 13th China-CEEC Agrotrade and Economic Cooperation Forum, etc.).

Successful presence requires the harmonization of national standards, quality and health requirements. In order to access the market more efficiently, the affected parties will examine the possibility of supporting sales on e-commerce platform for the distribution of their products. Finally, the parties promote the establishment of an International Agricultural Demonstration Park in Bulgaria (Plovdiv), which serves as the regional coordination center for the “16+1 Cooperation” in the field of agriculture.

People-to-People Contacts Regarding the numerous cultural, educational, scientific and tourism exchange programs, the Budapest Guidelines clearly highlight exchange programs related to the media (e.g. Year of China-CEEC Media Cooperation). The exchange of youngsters and young leaders is also important because it is a precondition for the consolidation of the “16+1 Cooperation”. The Member States have agreed that the deepening of tourism relations necessitates the representation of the CEE States as a single brand name. This suggests that the Member States start to prefer collaboration among small states in the competition for Chinese tourists rather than fighting alone with each other or countries regarded as larger tourism destinations.

Health Cooperation As for health, Budapest Guidelines devote special attention to the “16+1 Cooperation” as the forum of the international distribution of traditional Chinese medicine. In addition to that, it has been recorded that the CEE Region might play an important role in the cultivation and production of Chinese medicinal herbs. All this urges on the deepening of the regulation, whose institutionalization will be outlined under the China-CEEC Drug Regulatory Cooperation Forum hosted by the Czech Republic in 2018.

Local Cooperation Concerning local relations, one of the high-priority issues of the Budapest Guidelines is the deepening of the relations between local governments and local enterprises, with numerous forums such as the 3 rd China-CEEC Capital Mayors Forum in Serbia.

closing Finally, the Budapest Guidelines summarizes how the plans announced in Riga in the previous year have been realized. This is a highly important feedback mechanism to the “16+1 Cooperation” that shows the depth of the cooperation and facilitates the establishment of realistic objectives in the future. summary To sum up, it can be stated that the “16+1 Cooperation” has become a key institution within the CEE Region and its importance is obvious on the basis of the Budapest Guidelines, too. The investigation of the Budapest Guidelines clearly reflects the development of the past years, including the problems and challenges to be shown and the further possible development trends. Despite the criticism received from outside and inside, the “16+1 Cooperation” has become an institutional framework whose use is more and more beneficial for the participating states.

“To sum up, it can be stated that the »16+1 Cooperation« has become a key institution within the CEE Region and its importance is obvious on the basis of the Budapest Guidelines, too. The investigation of the Budapest Guidelines clearly reflects the development of the past years, including the problems and challenges to be shown and the further possible development trends.”

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GlobAl cities

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GLOBAL CITIES REDEFINED Author: Gere László

An analysis published in autumn 2016 differentiates between seven types of global cities. In addition to the innovative approach, the growing prominence of global roles played by Asian cities, which is the result of the urbanisation trends evolved in the last decades, is remarkable.

Thanks to urbanisation, cities mean the core of economic growth. Although an urbanised world means far more than global cities, the drives of modern economic growth – commerce, innovation, talent and infrastructural relations – are concentrated in a territorially unique way in these metropolises. During the course of mapping cities, it is revealed that significant differences manifest in different factors even on the level of metropolis regions, proving the presupposition that each city becomes a global city on the basis of its own competitive industries and fields. There is no single definition of global cities.

major scenes of manufacturing, especially innovative manufacturing, and finally, they are also the markets of manufacturing and innovation.

“Global cities play a key role in organising the governance of world economy.”

AN OVERVIEW OF THE RANK OF GLOBAL CITIES

In world history, there have been numerous occasions when cities of global significance emerged – such as ancient Athens or Rome – but the notion was introduced widely and in a modern sense by urban sociologisteconomist Saskia Sassen for the first time in her work published in 1991, entitled The Global City: New York, London, Tokyo (and as its forerunners, Peter Halls’s The World City from 1966 and the article of John Friedmann entitled The World City Hypothesis, published in 1986, must be mentioned). In her now classic book, Sassen identifies global cities primarily on the basis of economic aspects: they are entities functioning as leading centres of the global economy. According to her definition, global cities play a key role in organising the governance of world economy, they are the primary focus areas of financial institutions and, among leading economic sectors, the specialized services replacing the traditional manufacturing output, they are the

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Rankings of global cities, city typologies and top lists on world-level, and the scores achieved in them are rather important for cities, they may play a role in improving their ability to attract investment, and may provide transnational companies with viewpoints for establishing their centres and offices. Competitive city rankings as we know them today barely existed a decade ago, although the first ones date back to the 1970s (the Swiss Bank UBS released its first Prices and Earnings Survey in 1970 to compare 72 cities around the world, and they have been producing this ranking every year ever since). However, we can easily understand that as ranking can be performed according to numerous aspects, there is no single absolutely global city, and we cannot regard any ranking definitive, either. Consulting firms, think

tanks, governments, academics, chambers of commerce, business groups, tourism companies, and the media use a variety of approaches to evaluate and compare cities. The rankings range from comprehensive, in-depth analyses to compendiums of existing rankings (essentially rankings of rankings), to macroeconomic and future growth projections, rankings tracking the aspects of a selected social or business trend, etc.

REDEFINED NOTION OF THE GLOBAL CITY In September 2016, Brookings Institution released a publication entitled “Redefining Global Cities – The Seven Types of Global Metro Economies”, as part of its Metropolitan Policy Program. US-based Brookings Institute is one of the world’s leading think tanks (in 2016, it was on the very top of the list compiled by the University of Pennsylvania ranking global research institutions), which has a considerable research background in analysing urban issues, in addition to socialeconomic-political matters. Their research findings are shared with the leaders of cities, and through these consultations they are able to work out practical solutions, which, eventually, can be applied at both the national and the international levels.

Redefining Global Cities – The Seven Types of Global Metro Economies With more than half the world’s population now living in urban areas, cities are the critical drivers of the economy; the world’s 123 largest metro areas (studied in the analysis) contain a little more than one- eighth of global population, but nearly one-third of global economic output is focussed here.

As societies and economies have urbanized, they have upended the classic notion of a global city. No longer is the global economy driven by a few major financial centres like New York, London and Tokyo. Today, a vast and complex network of cities participate in international flows of goods, services, people, capital, and ideas, and thus make distinctive contributions to global growth.

Therefore, in the current economic environment, what the IMF terms as the world suffering from “too slow growth for too long” (thus the world economy is basically stagnating), efforts to understand and enhance cities’ contributions to growth and prosperity become even more important, as a kind of preparation for the next period of global growth. In view of these trends and challenges, this report redefined global cities.

“With more than half the world’s population now living in urban areas, cities are the critical drivers of the economy; the world’s 123 largest metro areas (studied in the analysis) contain a little more than one-eighth of global population, but nearly one-third of global economic output is focussed here.”

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THE SEVEN TYPES OF GLOBAL CITIES (1) Global giants

They serve as the command and control centres for the world’s largest advanced economies. They include the largest cities of the USA, Japan, France and the United Kingdom, New York and Los Angeles, Tokyo and Osaka, and London. These metro areas not only serve as the command centres of their extremely powerful nations, but as the world’s most significant concentrations of wealth, corporate decision making, and international exchange. The main feature of this group is their size: on average, they have 19.4 million residents and generate over $1 trillion in real output, three times more than the next largest set of economies, the Asian Anchors. If they were a single country, they would be the world’s third largest economy. These metro areas are also the world’s major nodes for flows of people, capital, and knowledge. Among the seven types of metro areas, Global Giants have the highest education levels, the second highest patenting rates, and the second highest number of scientific publications per capita. Los Angeles and Osaka may seem surprising at first sight; however, these metro areas are the fifth and sixth largest metro economies in the world, respectively.

(2) Asian anchors

Asian Anchors include five East-Asian metro areas (Beijing, Hong Kong, Seoul-Incheon, Shanghai, and Singapore) as well as Moscow (which, while more aligned with Europe, falls in this group on the basis of its size, wealth, business and financial services). Asian Anchors have many of the same characteristics as their estab-

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lished counterparts in Europe, Japan, and the United States, but are not yet as wealthy and globally connected. These cities serve as the gateways between the global investment community and their fast-growing nations. These cities attracted massive foreign investments, which have since been bolstered by investments in local infrastructure and skills. Asian Anchors are now among the cities with the largest concentrations of people and market activity. GDP per capita is the second highest in these regions, and since 2000 it has grown by an average of 4.2 percent per year. Several characteristics bind these cities, especially the five Asian metro areas: foreign direct investment (between 2009 and 2015) is the highest in this group, nearly double the average of the next highest grouping. These metro areas rank first in average internet download speed and relatively well-educated workforces. Yet, labour productivity in this sector is only about onethird as high as in Global Giants, they have a significant backlog in terms of patents and scientific publications, although on national level they can be considered the innovation hubs of their respective countries.

3) Emerging gateways

This type includes 28 large metropolitan areas from developing economies that serve as the largest business, transportation, and, in most cases, political centres of their countries and regions. Nearly one-third of the cities in this group are capitals ( (e.g., Ankara, Brasilia, Cape Town, Mexico City, Pretoria, Santiago, and Warsaw). Eight of them serve as the financial centres of their countries, and many of them also serve as gateways for entire regions (as is the case for São Paulo in financial and business services within South America; Istanbul connecting the Middle East and Europe; Johannesburg as the business hub of sub-Saharan Africa). In this group, cities house on average 10 million inhabitants and have an average GDP of $265 billion. Real GDP per capita has grown 5.5 percent annually since 2000 (second fastest after Factory China metros). They are not yet on par with the Global Giants in terms of international business or with Knowledge Capitals in terms of global innovation, although their prominence is growing quickly.

(4) Factory China

(5) Knowledge capitals

This category comprises Chinese manufacturing hubs, and these 22 cities are a good representation of the geographic diversity of China’s industrial revolution. It includes metros on China’s east coast (Hefei and Nantong), inland regions (Chengdu and Zibo), and the Pearl River Delta (Foshan and Dongguan). In this group of Factory China, there are second- and third-tier population centres that are growing quickly. The typical city in this group has an average population of 8 million and a nominal GDP of $205 billion. Output and employment have grown in these metros by an outstanding 12.6 and 4.7 percent annually between 2000 and 2015. Real GDP per capita has expanded fivefold since 2000, from $2,500 to $12,000. The most salient feature of this group is the extreme reliance on manufacturing, which accounts for nearly 40 percent of their total output; this ratio increased in a time-proportional manner, in 2000, it was merely 30 percent. Factory China metro areas plug into the global economy as nodes in international manufacturing supply chains, providing goods to wealthier consumer markets in advanced economies. Several multinational corporations (e.g. Unilever, Goodyear, Samsung, Intel, Pfizer, Dell) anchor manufacturing operations in Factory China.

But in these cities, the industrial activity has come with significant environmental pollution: pollutant levels are 40 times above what the WHO recommends.

The lack of economic diversification explains why cities in this cluster rank last in flows of FDI, venture capital attraction, and international passengers. Additionally, in this group there are only few research universities, resulting in a low share of patents, and less than 10 percent of the population 15 years or older has tertiary education.

Knowledge Capitals tend to be mid-sized population centres that are among the wealthiest and most productiv cities in the world. This group of 19 metro areas has an average population of 4.2 million, the second smallest group by population. Nevertheless, they have the third highest average economic output, and the highest nominal GDP per capita and GDP per worker.

Knowledge Capitals are the world’s leading knowledge creation centres. Having excellent infrastructure connectivity, (among others, this is the reason why they have the greatest volume of aviation passengers in the world), they compete in the highest value-added segments of the economy, relying on their significant stock of human capital, innovative universities and entrepreneurs. 41 percent of their 15-and-over population has obtained a college degree (often from an elite university), this group boasts the largest share of highly cited scientific publications, and although with only about 1 percent of the world’s population, 16 percent of patents were generated here (between 2008 and 2012). Knowledge Capitals also have the highest venture capital investment rates per capita in the world (led by San Jose, San Francisco, and Boston): more than half of all global venture capital funding flowed to these 19 markets over the past decade.

(6) American middleweight

Mid-sized production centres, scattered all over the United States; cities that have experienced significant population growth recently (Miami, Phoenix, Orlando, St. Louis, Tampa, Sacramento). While many of the cities in this group are still finding their global niche, they

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all maintain at least one globally relevant export sector (for example, Charlotte, Detroit, and Phoenix are among the leading metro exporters of engine and power equipment, motor vehicles, and semiconductors, respectively). Their competitiveness isenhanced by the existence of highly skilled labour force (strengthened by an advanced tertiary education infrastructure) and tradable clusters, enabling them to succeed in global markets as well.

(7) International middleweight

Methodology: The typology focusses on competitiveness; this is a complex variant made of 5 plus 1 indicators, determined in the course of the ranking, The 5 plus 1 indicators include: +(1) tradeable clusters (stock of greenfield foreign direct investment, and total stock of jobs created by FDI between 2009 and 2015); +(2) innovative capacity (share of total publications between 2010 and 2013, total patents in absolute number and per capita between 2008 and 2012, stock of venture capital investments in absolute value and per 1,000 inhabitants, 2006-2015); +(3) talent (human capital) (share of the popula-

This last group is very diverse, including wealthy cities in Canada, Europe, Asia and Australia. These 26 metros have an average population of nearly five million, their economies are very varied, including cities (e.g. Toronto, Sydney, Frankfurt, Madrid, and Copenhagen) that play a fundamental role in the provision of business and financial services in their national and regional economies, as well as industrial centres (Kitakyushu-Fukuoka, Nagoya, Stuttgart, Karlsruhe, Milan, and Barcelona). They tend to specialize in knowledge services, advanced manufacturing, or some combination of both.

Nonetheless, there are several shared characteristics that bind International Middleweights. They are outstanding in terms of migration of workforces and capital flows, about one-fifth of their population is foreign born, the highest share among any cluster. These metros boast the second highest level of foreign direct investment per capita, with $2,000 of FDI stock per inhabitant. The number of people with tertiary education, the number of research universities and patents filed are also high in these metros. However, they share another characterization that is not so favourable: sluggish economic growth. Between 2000 and 2015, output, GDP per capita, and employment grew less than 2 percent annually, each the slowest of any group. The international financial crisis of 2008 dealt a crushing blow to these cities, breaking their trajectory of economic growth; more than one-third of the cities could not return to their pre-crisis GDP per capita levels until 2015, and five cities have yet to regain their pre-crisis employment base.

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tion 15+ with tertiary education in 2014, or at the soonest point of time) +(4) infrastructural connectivity (number of avi-

Major global city rankings produced according to different criteria Comprehensive rankings – Cities of Opportunity (Pricewaterhouse Coopers) – H ot Spots 2025 (Economist Intelligence Unit) – G lobal Cities Index and Emerging Cities Outlook (A. T. Kearney) – G lobal Power Cities Index (Mori Memorial Foundation) Niche rankings (audience, perspective, city selection) – World’s Most Competitive Cities (IBM; (audience: business site selection) – S ustainable Cities Index (ARCADIS; (perspective: sustainability) – G lobal Financial Centres Index (Z/Yen Group; (city selection: financial centres)

– G lobal Cities of the Future (fDi Intelligence; perspective: foreign direct investment) – Resilient Cities (Grosvenor; audience: real estate clients) – Q uality of Living Survey (Mercer; audience: companies with an international workforce) – T he Wealth Report Global Cities Survey (Knight Frank (audience and perspective: real estate and attraction of high net worth individuals) – City Momentum Index (Jones Lang LaSalle; (audience: real estate clients) Analyses based on macroeconomic data – G lobal Metro Monitor (Brookings Institution) – U rban World: Mapping Economic Power of Cities (McKinsey Global Institute)

ation passengers in absolute value and per capita in 2014, average internet download speed in 2015); +(5) governance (the extent it helps to attract investments and implement growth strategies (data were not available for all metro areas) (+1) general industrial and economic characteristics (population, GDP, GDP per capita, output per worker, industry share of overall output, industrial output per worker, 2015).

Identification and selection of metro areas: 123 metro areas with the largest economies measured at purchasing power parity rates were included in the survey (on the basis of data from 2015). With a few exceptions, these metro areas all tend to have economies larger than $100 billion in nominal terms. The sample’s average population is 7.6 million.

Global growth is not solely powered by these large metro economies; in fact, small and midsized cities matter greatly, this study, however, intentionally focuses on a smaller sample because they uniquely concentrate the assets that

IMPLICATIONS Through examining global city economies, the authors of this study identified three broad territorial patterns.

2. The different ways cities engage globally are reflected in their economic outcomes. Unsurprisingly,

1. First, there is no one general “definition” of the global city. Every city may become one on the basis of various factors. But the pervasiveness of globalization has linked metro economies in an international network that is simultaneously collaborative and competitive.

lower-income metro areas, led by Factory China, demonstrate the the greatest growth (they have experienced the fastest GDP per capita growth since 2000), and although the pace is slowing, growth is expected to continue in the future). Global Giants and Knowledge Capitals not only have higher average incomes but have also experienced faster growth in GDP per capita, while the American Middleweights and the International Middleweights tend to have not only lower incomes but also lower growth.

Technological innovation features heavier than ever in becoming a global city, rendering a set of U.S. and European mid-sized regions of global significance (due to the results of their research universities and firms engaged in research). Their ability to attract global finance and investment, their role as global gateways to large, middle-income countries are decisive, rising most of the manufacturing and export-oriented Chinese metro economies onto global level.

Maintaining a developed economy and specialisations are major global strengths of several advanced-economy metros (USA, United Kingdom, Europe, Japan).

3. Local and national leaders must approach economic strategies with a clear understanding of the role their city-regions play in a global context, the opportunities they have, and the risks they have to run. The study also produced a set of recommendations within each group for devising their development strategies.

undergird global growth.

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FUTURE OF CITIES Authors: Ráhel Czirják, László Gere

Cities, embodiments of human civilisation, existed already in the millennia before the Common Era. However, the percentage of urban population compared to the total population of the Earth remained very limited until the industrial revolution, when technological development and socio-economic changes induced explosive growth.

In the developing world, this modern urbanisation started only after regaining freedom from colonial rule. Despite the one and a half or two century backwardness, the urban population of the global South today far exceeds that of the developed world and the difference will remain. But what will the future bring? What trends can be expected until the middle of the century and what will our cities look like in 2050?

We are trying to find answers for these questions in the present article relying on different forecasts and predictions.

DEMOGRAPHIC TRENDS From a settlement aspect, 2007 was a turning point in human history, because since that year more than half of humanity have been living in cities. The tendency is going to continue, so we can state that we live in an increasingly urban world. According to the UN’s forecast named World Urbanisation Prospects (2014), 66.4% of the Earth’s population will live in cities by 2050, which means over 6.3 billion people.

At the same time the growth rate of rural areas tends to decrease. While the growth rate was average 0.26% at the turn of the millennium, until today this has fallen to 0.07%. The UN expects the growth to have a negative rate between 2020 and 2025, by 2050 the rural population will decrease by 0.4% annually. In absolute numbers this means growth in rural population until 2020, when it reaches a peak of 3.38 billion. After that a slow decrease starts and by 2050 only 3.2 billion people will live in rural areas.

The growth of urban population is not a uniform process in the different regions of the world. The most urban areas of the Earth are in the developed world according to the UN classification: Europe, North America, Australia, New Zealand and Japan. Latin America and the Caribbean also belong here as kind of odd ones out. In these regions and countries, the urbanisation rate (that is the proportion of urban population within the total population) is over 78%

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on the average, and by 2050 it is s expected to grow to 85.4%. As opposed to this, the urbanisation rate in the emerging world (Africa and Asia) has not yet exceeded the 50% turning point, and will be 63.4% by 2050. Considering the absolute numbers, the area is not legging that far behind. While there live less than 1 billion people in the cities of the global North and their number will be around 1.1 billion by 2050, the number of people living in urban environment is already over 3 billion, and this will grow to 5.2 billion by 2050. In other words, the major portion of urban population growth – 94% – is predicted to be realised in the developing world.

In a continental distribution we can say that the most rapidly urbanising region is Africa, where the urban population grows by an annual 3.4%. The pace of growth will decrease by 2050 – it will be ‘only’ 2.56% – but this huge population growth will cause the urban population to grow from the present 505 million to 1.3 billion until 2050. Considering urbanisation rate, the most urbanised continent of the Earth is America. In the Northern region, the urban population proportion is 82%, in Latin America it is 83%. This means an absolute of 817 million people.

Due to the particularly high percentage of urban population, the growth rates are not as significant as in Africa: in North America 1%, in Central and South America 1.3%. The growth is projected to slow down

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in the future: until the middle of the century the urban population growth in the northern part of the continent will be an annual average of 0.6%, while in the southern part 0.44%. These tendencies will result in having an urban population over 1 billion people in 2050.

The ‘Old Continent’ has a similarly high urbanisation rate, too: it’s currently 74% and is forecasted to grow to 82% by 2050. However, there is a significant difference behind these figures in comparison with Africa if we consider the absolute urban population number. In Europe 550 million people live in urban areas and their number will grow with maximum 30 million until the middle of the century.

Considering the proportion of urban population within the total population, the third place among the continents is taken by Australia and Oceania, where 70.8% of the total population live in cities. According to forecasts, the ratio will slowly grow to 73.5%, that is the urban population number will grow from the present 28 million to 42 million on the continent by 2050.

Regarding the absolute population, Asia is standing out of the other continents, because the urban population is already over 2 billion and it will grow to 3.3 billion until 2050. This means that by the middle of the century half of the world’s population will live in the urban areas of Asia.

Size of urban population in 2050

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CITIES AS GLOBAL POWER CENTRES As opposed to the dynamism of economic, social and technological forces, politics and governance seems to be fairly static. The Westphalia system of nation states has been dominant for almost five centuries, but global governance still remains weak. And this gives an opportunity for cities to rise. The rapid urbanisation of the developing world will shift the centres of gravity from West to East and from North to South by 2050. In 2014, half of the world’s urban population came from Asia. Another very illuminative comparison says that half of the world’s urban population come from altogether seven countries (also in 2014), which are (in descending order of urban population): China, India, the United States, Brazil, Indonesia, Japan and Russia.

Cities have a growing economic power and 80% of global GDP is already produced in cities. If all the major global cities in the city ranking of the Brooking Institution (New York, Los Angeles, Tokyo, Paris and London) formed one state, it would be the third biggest economy in the world after the United States and China (in terms of GDP).

A shift to the East is already being experienced today, and as trends predict, it will be even more significant in the future. The above-mentioned

Tokyo

Tokyo

Tokyo

Osaka

Delhi

Delhi

New York-Newark

Shanghai

Shanghai

Mexico City

Mexico City

Mumbai

São Paulo

São Paulo

Beijing

Mumbai

Mumbai

Dhakka

Calcutta

Osaka

Karachi

Los Angeles-Long Beach-Santa Ana

Beijing

Cairo

Seoul

New York-Newark

Lagos

Buenos Aires

Cairo

Mexico City

Cairo

Dhakka

São Paulo

Delhi

Karachi

Kinshasa

Rio de Janeiro

Buenos Aires

Osaka

Paris

Calcutta

New York-Newark

Moscow

Istanbul

Calcutta

Figure 3 The world’s 15 most populated cities in 1990, 2014 and 2030 (thousand people; symbols indicate the changes in the position since the previous date)

Source: UN World Urbanisation Prospects 2014, edited by author

city ranking has several categories for Asian cities: it treats the group named Asian anchors (Beijing, Hong Kong, Seoul-Incheon, Shanghai and Singapore) separately, discusses 22 cities in the category of the Chinese industrial cities, the category of emerging gateways deals with 28 large cities 13 of which is located in Asia (10 in China).

The growth of cities is an indispensable prerequisite for the economic growth of the given countries – this is one of the basic assumptions of the study prepared by the McKinsey Institute about the urban population of China, that will grow to 1 billion by 2030, which requires developing a well thought-out urban planning strategy. It is because productivity can be increased most effectively with a higher degree of urban concentration. The study says that the concentrated growth scenario predicts 20% higher GDP than the scenario about scattered development.

In 2014, 28 megacities (cities with a population over 10 million) were home to one in eight of the world’s urban dwellers. Most of the megacities and large cities (cities with a population between 5 and 10 million) are located in the global South, as opposed to the situation a few decades ago.

China alone has six megacities (Shenzhen, Tianjin, Chongqing, Guangzhou, Shanghai, Beijing) and 10 large cities, and it will add one more megacity (Chengdu) and six more large cities by 2030. Four of India’s large cities presently are projected to become megacities in the coming years (Chennai, Bangalore, Hyderabad, Ahmadabad), for a total of seven megacities projected in the country by 2030 (the three existing ones are Delhi, Mumbai

and Calcutta). Outside these two countries there were 7 megacities and 11 large cities in Asia in 2014. The 3 megacities of Africa are Cairo, Kinshasa and Lagos, but by 2030 another three cities will reach a population over 10 million (Dar es Salaam, Johannesburg and Luanda). By 2030 the number of megacities will rise from the three in 2014 to twelve. The four megacities of Latin America (Buenos Aires, Mexico City, Rio de Janeiro and São Paulo) will be joined by two others by 2030: Bogota and Lima. The population of the current megacities (e.g. New York, Tokyo, London, Paris, Moscow), however, will minimally increase or even decrease, so their global significance will probably be smaller (although it is important to know that global weight is determined not only by the size of population, but also by various other factors like economic performance, education, accessibility etc.). So – according to forecasts – the power and influence of the cities in the global South will substantially grow by 2050.

ENVIRONMENTAL SUSTAINABILITY IN FUTURE CITIES At present 2% of land is occupied by human settlements and infrastructure, but with continuing population growth and urbanisation, this ratio may double by 2050. Cities – due to their high concentration of population – put increased burdens on the environment both in terms of input and end products of resource utilisation.

Per capita energy consumption has doubled since 1950, and it can grow by another 50% until 2030,

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according to the World Economic Forum’s forecast. The International Energy Agency projects that this will mean doubled consumption in Asia.

Although thanks to various technological developments the application of renewable energy sources is moving to the fore these days, the rapidly growing energy demand will be satisfied using mostly fossil fuels.

numerous environmental challenges for urban regions, the solution of which is of key importance for the Earth. These challenges can be answered among others by changing consumption habits, actions from environmental policies and new technologies.

TECHNOLOGICAL SOLUTIONS OF FUTURE CITIES

This will considerably increase greenhouse gas emission, half of which is already released by cities. The OECD’s Environmental Outlook forecast warns that by 2050 air pollution will be the leading cause of deaths related to the environment. Air

Technological changes can have negative effects; it is enough to mention the uncompetitiveness of human labour in certain jobs as opposed to robots. As a result of automation and globalisation,

pollution shows significant regional differences; developed countries are expected to start reducing air pollutant emission, while in emerging countries this will happen one or two decades later.

Air, soil and water pollution levels are very high globally and forecasts say it will continue to grow, especially in Asia. The major pollution emitters are cities, so the urbanisation trends detailed above will most probably lead to growing environmental pressure if there is no change in environmental regulation and technologies. The future holds

production and manufacturing industries – and the related jobs – have moved to the developing world. Currently the same is happening to several office jobs of the service industry. But cities will continue to benefit from technological changeseven if it’s only contributory and sometimes harmful. Technological changes enable cities to access global markets, discover new opportunities in education and training, develop medical services, gather and utilise big data and several other examples could be brought.

Technological changes will alter a whole city’s operation by 2050. This can be witnessed now, because different smart city solutions have started to spread already, and we will make big steps forward in optimising the processes in the future.

It will be even the more indispensable because there’s still significant growth going on in cities in the developing world, to which public utilities have to be adapted. This can be most easily and cost-effectively done through IT and technological solutions. Here are some ideas about future cities: – g reen cities: since environmental pressure is concentrated in large cities, the expansion of green areas becomes more emphatic, on the surfaces of buildings as well (this is the so-called vertical forest, a fairly widespread construction form).

The Paris 2050 visualisation is a fine example of the green city (where vertical farms also appear).

– s mart infrastructure in cities: the process of making all public utility services measurable and closely monitored will become extended and in the future integrated systems will control and manage the city’s operations in several areas

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from water supply and public lighting to transport and air quality. Such technology is already available, we can even identify areas of application, but in 2050 we’ll have more widespread and much better systems.

– g iant buildings: large housing units are nothing new. At the beginning of the 20th century several designers (the most famous is probably Le Corbusier) dealt with the idea of buildings accommodating the population of a whole city. The dramatic growth of population is still a problem in several cities in the middle of the 21st century, so it is conceivable that housing needs will be satisfied by giant buildings that are much larger than those that exist now.

– e nergy efficient cities: numerous projects and urban cooperation programmes have set the goal of transforming cities into low-energy cities through complex infrastructural investments.

For this the integrated cooperation of several areas (power generation, waste management, transport, architecture, public utilities etc.) is necessary.

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Richard Florida: Creativity is the basis of the future

believed by its members – among which individualism, diversity and openness, as well as meritocracy, stand out.

Their set of values is also reflected in employment aspects, and therefore in relation to the increasingly expanding changes of the last ten years. It has become general characteristic that creative work is ranked higher than an attractive salary in the list of motivations. A job full of challenges and responsibilities has gained importance. Most individuals dream of flexibility in terms of a job, environment, employment and the community. Professional feedback is also important to them. Florida published a new version of his book in 2010, where the former thoughts reflecting on the changes triggered by the crisis is the essential message.

Florida looks at the 2008 crisis as the ultimate failure of the economic and industrial order. He sees the development of a new economic system where the relationship between companies and employees is changing, and which also takes into account problems arising from confrontations between technological and social development. Although there is a negative

Author: Eszter Polyák, Richard Florida gave a presentation in Budapest upon an invitation from PAGEO

Richard Florida, one of the world’s best known urbanists, decided to analyse in his research what makes a town successful and liveable. Florida represents the creative class and supports the urban environment that will become the long-term engine of economic, scientific and cultural development.

Invited by PAGEO, the American professor gave a presentation in Budapest in June 2015 with valuable thoughts, also relevant for Hungary.

Florida is the author of a number of bestsellers, of which The Rise of the Creative Class stands out. In it, the author attempts to define the creative class, which is the social class that determines our age the most. According to Florida, the identity of the new leading class of the current times has not yet evolved.

This identity stems from the creative factor and the transforming economy. The purpose of the book is to show why and how that class will achieve an outstanding role and what consequences it will have for society as a whole.

Using the words of Keith Simonton, he defines creativity as the interconnection of “novelty, usefulness and surprise”. Creativity is required for current lifestyles and can be used in all areas, but occasionally is not compatible with an organised system. A creative individual is no longer a novelty; it is the “new mainstream” in the USA. According to Florida, the great economic, cultural and geographic changes have been driven by these creative experts since the 1990s. The creative class evolved from the economy transforming in response to the crisis, and its identity may also stem from economic change.

This corresponds with the statistical data, according to which the share of the creative class in the labour market did not decrease – in fact, it mostly increased

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during the crisis. Two types of employees can be distinguished within the group: the “super creative” base, which actively drives innovation, and creative experts, who are provided opportunities to exploit their creativity in their job. They make up one-third of active employees, and Florida sets a target for the future to exploit the creativity of the remaining twothirds of individuals participating in the working and service-providing classes.

“... creative work is ranked higher than an attractive salary in the list of motivations.”

The most important message given by Florida is the mission of the social class as he defines it. He calls upon the creative class to build a new structure that can produce benefits for all society. In that process, he defines six key components and, although some of them seem obvious (strong middle class, social net, education system), he introduces the feeling of responsibility and urges people to find their identity – because, without these, the creative class cannot be the path to future opportunity.

“... the great economic, cultural and geographic changes have been driven by these creative experts...”

The creative class is fundamentally contrary to the ideal, expert image of corporate culture that dominated the 20th century. Loyalty is less important; demand for mobility increases; and certain rules, such as dress code, become looser.

Their work has become an organic part of their lifestyle, but creative and flexible work also has a shady side – namely, such individuals struggle with a continuous shortage of time, because they allocate every minute of their lives to their profession. The creative class can also be formed based on the values

photo: Jaime Hogge

WHO MAKES THE EARTH MOVE

correlation between the global creativity index and the Gini index of countries, the problem of inequality is still especially severe in the USA, which is presented to us as an example. In that regard, Florida is afraid of a new type of geographic segregation.

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RICHARD FLORIDA : CREATIVITY IS THE BASIS OF THE FUTURE

Richard Florida attended the Brain Bar conference, held in Budapest on June 5, 2015, where he gave a keynote presentation on successful municipalities.

In his presentation, he explained that he had visited Budapest before and was happy to see the obvious development. The spectacular changes raised a few questions: What is happening in the economy and in towns? What is happening in Budapest? Florida outlined potential wider prospects for countries recovering from the trauma of the economic crisis. In the course of history, the transformation of the economic order has always been a natural process, although as a general tendency progress was always made as a result of changes in the use of physical equipment.

That is how the agricultural society turned into an industrial society. However, over recent decades there have been major changes in the quality of materials, because the “materials” of our times include technology and information. The labour market has transformed accordingly. Since the 1970s, the ratio of employees working in the service sector has gone up significantly, and their dominance is still prevailing.

Florida revises Marx’s thoughts when defining the individual features of the people of our times. Not only information and technology make our times special, but so does creativity, which is a special human quality of the individual forming this period. With the help of this quality, the work of the community transforms its own environment.

This is supported by the fact that there are 20 countries where 40 per cent of the employees are engaged in creative jobs. According to Florida, the same statement applies to approximately one-third of jobs in Hungary. The main driving force of economic and social development consists of the 3 Ts of development: technology, talent and tolerance.

Indices were established on the basis of these three factors. Hungary is ranked 34th and 33rd in the world according to the first two factors, which is an outstanding result according to Florida. There is a slight shortfall in tolerance, as Hungary lies in the 41st position globally in that respect. Although he admits that his calculations have been criticised, he still maintains his main theory that creativity exists in each person. He supports that statement with plenty of research conducted in factories. The most successful companies turned out to be those that regarded their employees as potential inventors and creators and made their plants competitive by

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Advisor to global brands

exploiting that creativity. Nonetheless, factories are less relevant to the current system.

These days the largest class is the service provider class. This sector makes up 50% of the American labour market. It is characterised by low operational productivity. Its robust growth, which began in the 1970s, stemmed from the robotisation of industrial activities. However, the American dream has started to decay. Added value and salaries are low, which has had detrimental effects on the middle class. Inequality continues to grow. According to Florida, more creativity in the provision of services would be a solution, as it would provide not only social advantages, but would also lead to

Florida established the Creative Class Group advisory company in 2002, where the world’s next generation of researchers, university lecturers and business strategists provide advisory services to a number of companies and organisations.

“Each individual human creature is creative.” This short sentence can also be referred to as Richard Florida’s ars poetica, because in his research career, the urbanist focuses mostly on the power of human creativity that transforms cities and the quality of life. Richard Florida is the director of the Martin Prosperity Institute at the University of Toronto and a global research professor at New York University. In addition to his university career, he is also the founder and director of the Creative Class Group.

In his career, he explains issues of economy and development for the 21st century through sociological, economic

greater productivity.

THE POWER OF THE “HUB” Florida also challenges the statement “the world has become flat”. In his opinion, geographic space and distance are more important than ever before, especially since the greatest talents and inventors always emerged from densely populated hubs, which throughout the history of mankind have always been cities.

He also thinks that this statement is proved by the map of night-time illumination, which reflects the geographic structure of the global economy. Lights outline spectacular networks. They concentrate the world into 40 economic functional areas, forming mega-regions. According to Florida, these days it is

and demographic research.

Apart from academic work, he is the editor-in-chief of The Atlantic magazine and founder of the CityLab column, which has become the world’s leading website dedicated to urbanism. He makes the results of his latest research available to the public in order to point out the challenges of the 21st century affecting American cities.

not countries, but mega-regions that compete with each other. Therefore, instead of all of China, only the Shanghai mega-region, or similarly, the BudapestVienna mega-region are competitors.

However, even within these territorial concentrations, the three Ts are very important and concentrated in the territorial hubs of our times – i.e., cities, where Florida can see a revolution developing. Communities create the greatest innovations, as innovation stems from the collective talent and will of a city.

The quality of community cannot be neglected either.

A good community has distinctive features including openness, flexibility, independent and tolerance.

Naturally, the quality of place is also important. This entails several dimensions with natural characteristics that are made use of and not destroyed. One is the urban requirement, where heritage protection and innovation are equally important. Another is cultural environment, which does not only involve high culture, but also initiatives on the street. Even startup companies tend to move into cities. On the other hand, gentrification, concentration and plutocracy are observed in New York, London and San Francisco, causing significant problems for larger groups seeking evolution. That is why the search for new places is an important part of the urban revolution.

For Florida, human creativity is the most important factor. You never know where the next source of innovation will come from, and therefore this opportunity must be maintained for each individual. This is the most important mission of the creative class.

He analyses current issues, such as the situation of the New York middle class on the luxury property market or firearms permitted in American secondary schools, and he also writes about the negative impacts of economic incentives for small enterprises.

His clients include Google, Philips, Kraft Foods and a number of other multinational companies, which receive advisory services on the basis of their global database and analyses. Their investment strategies also take into account local specificities, such as the structure of cities, the degree of urbanisation and the local importance of the creative class. Thus, they address primarily companies that intend to attain a target group from creative individuals who have considerable purchasing power. Their activities focus primarily on Florida’s research and concepts in terms of economic competitiveness, as well as social and cultural development. His wife, Rana Florida, is a companion in his work, too, and supports the objectives of the organisation through business and enterprise development.

Richard Florida at Budapest Brain Bar

FLORIDA AND THE BUDAPEST BRAIN BAR

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CONTROL, CELL BIOLOGY AND SUCCESS Interview with Albert-László Barabási, conducted by: László Gere

Albert-László Barabási is one of the best known and most cited figures of Hungarian scientific life in our days. His name is closely entwined with the most dynamically developing area of our age, network research. The researcher held a public lecture on February 18, 2016 about network theory in the framework of the PAGEO Club. Below you will find an interview with Albert-László Barabási.

Albert-László Barabási was born in Karcfalva, Transylvania into a family of humanities scholars. He attended high school in Csíkszereda, where he studied sculpting, then won the student Physics Olympiad.

He received a Master's degree in Fractals at Eötvös Loránd University, then he received his Ph.D. at Boston University in 1994 under the guidance of H. Eugene Stanley. Thereafter he was employed by IBM, where he first came into close contact with network theory, which was to become his specialty later on.

His work led to the recognition of scale-free networks in 1999, when he created the AlbertBarabási-model, which describes the structure of the world wide web as well as complex metabolic networks and genetic systems. Until 2007 he was professor at University of Notre Dame, Indiana.

Today he teaches at Northeastern University in Boston, where he is director of the institution's Complex Network Research Center. In addition, he teaches seminars at Harvard University's Medical Faculty. He is a member of the American Physical Society, the Hungarian Academy of Sciences and an external member of Academia Europea. In 2003 he was elected Scientist of the Year by Wired magazine.

The world-famous network researcher gave a talk on February 18, 2016 in the framework of the

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PAGEO Club on how networks permeate our lives.

Then he gave an interview to HuG magazine about his current research, and the links between network theory and geopolitics.

What are your most important research directions at the moment? What kinds of questions do you seek to respond to?

At the moment, we have three teams that do lab research. One question we are exploring is the control of networks: in the past fifteen years we have studied what networks look like, but now we are ever more confronted with what happens on these networks and what kinds of tools we have in order to exert some influence on network processes. We are calling this control, in part because the toolkit we are using for this purpose originates from control theory in engineering science. We are attempting to extend its use to networks. The other direction is understanding the networks within cell biology, explicitly focusing on understanding diseases. Our goal is to find a cure for existing diseases, or to improve the condition of the ill. The third direction unites issues related to social questions: more precisely, we study success, in particular scientific success, how one network node comes to stand out from others, how we can describe

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a scientific career quantitatively, how we can predict the potential effect of a Ph.D. thesis in numeric terms. These three research projects are running at the moment: control, cell biology, and success.

The central interest of your book, Linked, was computer networks, a topic that your latest volume, Bursts, also discusses. At Harvard, you researched cell networks. Which network interests you the most today?

For us topics open up and close continuously. We have not done any research on the Internet for ten years. The book Bursts, for instance, was about human locomotion, but that research is now over, too.

As topics become too old, we close them down, we have no interest in carrying skeletons along.

Do others not continue them, either?

Yes, others research them, but there is a certain toolkit in our hands and applying it we can get a certain level of result. Thereafter we could only get derivatives of the same question, and we could not get anything substantially novel out of it. At those times, if a new, exciting topic comes up, we redeploy our researchers to that field. From this point of view, our system is good, because the students graduate, the postdocs get teaching jobs, and then we no longer employ new people for the old topic, but we strengthen our capacities in the new one.

In the future, what applications will your models have? Which topic occupies your thoughts the most these days?

All three topics I mentioned above occupy me simultaneously. Through network research we can focus on many, many things. There are researchers who study networks in space. This might in fact be closest to geopolitics, but one could study the world wide web, social networks, linguistic networks and so on.

The area is inexhaustibly rich. We have taken on these three at the moment, In the future the next big topic potentially coming up is the brain, more precisely, comprehending the networks of the brain, as we can expect better and better data. Therefore, we will probably move in this direction. Which direction we can move into also depends on which fields yield data of such quality that are already useful for our tools, but the topic is not an old hoary chestnut yet.

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What would you advise those young researchers who would like to study network theory in depth?

Quite a few students ask me this question. Then we always discuss what it is in particular that they are interested in, and then we try to find something for them in that smaller field. If you tell me that you wish to study biological systems at all costs, obviously, I will not give you a problem from the field of sociology. The other thing we need to consider is where the big questions are. There are two big question packets: on the one hand, in basic research we have a very good understanding of network structure, but not yet of network dynamics. We have no comprehensive theory about what happens in networks, and how the network process influences the structure of the network itself. There are many partial results, but there is no comprehensive theory. If someone feels that they wish to study fundamentals, and has a very strong background in mathematics, then this is the direction I would send him in. Here, a solid background in mathematics is indeed very important, as this is not an empirical question. Here, the student needs to come up with a theory. Simultaneously, there is great potential in the application of these tools in new fields.

In the coming 10-20 years, the largest potential field of applied research, as I have already mentioned, is the brain. For we have just come to the point that the brain must be mapped. The conceptual toolkit is being developed in the world, primarily in the United States and in Europe, using which we can map simpler organisms' brains for the time being, but later on the human brain as well. Once these maps appear, an enormous set of questions will emerge, namely, how we can analyze these maps, how the brain works as a neural network. Here, applying the network theoretical toolkit will become unavoidable.

I am not saying that the network will be the solution to the understanding of the brain or the explanation to the questions of consciousness or memory. Many kinds of breakthroughs will be needed, but without network theory it will not be possible to answer these questions. I would advise those thinking longterm to start out in this direction. In this field, there are those students who want to tackle such fundamental questions as what a network looks like, how it influences the brain processes that participate, and those students too, who want to tackle biological or

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medical questions, such as in what manner can we "fix" the brain, i.e. how we can cure the brain's diseases.

The brain problem is doubly a question of networks.

Partially, the molecule networks within brain cells collapse, when we say that there is a lack of dopamine, but as a result of this, the neuron network itself may collapse. These two questions overlap. For instance, Alzheimer's and Parkinson's are both collapses of a particular neural network. A certain part of the brain quite simply dies. In another case, certain molecules form, and therefore the network cannot run. This twofold network question will take a very long time to untangle and for us to understand in some way.

This will keep several generations engaged.

To what degree are brain research and research on artificial intelligence connected?

These are two very different worlds. The issue of artificial intelligence is at present in the hands of programmers. It might be inspiring for us with regard to the functioning of the brain, but it is not obvious that artificial intelligence is going to be solved on the basis of the brain's operation. The hardware is namely very different. One possibility is that we build a software on it that simulates on the hardware what our brain does, the other possibility is to create a software that suits the hardware better.

"...the strength of machine intelligence is not to reproduce human thinking in its entirety, but to complement it... " In my opinion, the winning software is likely to be one that maximally exploits the hardware's capacity, and not one that emulates human thinking. This is only a hope, that the difference between human thinking and machine thinking will always remain and will always remain qualitative. Because the strength of machine intelligence is not to reproduce human thinking in its entirety, but to complement it.

The toolkit of network research so far has not really been deployed for the examination of geopolitical or international relations issues. What could the reason for this be?

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I am not sure whether it truly has not been deployed or whether we merely do not call it network research.

In 2007 we published a long article in Science, in which we studied import-export networks. This study not only yielded a book, but also an entire movement.

We examined which countries export what, and out of this we constructed a network. Through this we succeeded in posing such questions as what territories may become reachable for a given country in the future. Let me take an example: if a country is very good in exporting bananas, this means that it has the appropriate plantations, climate, that there are agricultural experts and know-how on packaging and shipping. All of this may be really easily used towards, say, fig cultivation. Thus, the country may easily switch to fig exports, if that happens to be a more profitable branch. However, all of this infrastructure is of no use if the country wants to switch to iPad production. However, if someone has the technology to produce laptops, that may not be great help in banana cultivation, however, he may easily produce iPads. Thus, from this point of view what the spectrum of possibilities is lies in the hands of the country.

It is possible to say very precisely which branches of industry are achievable for them at present.

Banana cultivating countries need a giant effort spanning several decades to come into a position where they are able to manufacture iPads, as they need to acquire new knowledge, new technologies, and train engineers and experts. It is not realistic when a banana cultivating country, which currently possesses no experience in electronics at all, declares that it would like to become an electronic powerhouse in the next 20-30 years. Thus, networks have succeeded in measuring the economic potential of countries. This tool is now widely used, for instance by the World Bank. If a country applies for development money for a certain branch of industry, they then examine with the aid of networks whether this switch is realistic. Then they either reject the proposal or they help them in developing a realistic portfolio based on their current resources. A specific example occurred for instance when Pakistan turned to the World Bank with a great new development, and was advised to go in a different direction on the basis of our map, for what they originally planned was simply not realistic. An ex-student of mine, who is now a professor at MIT, CĂŠsar Hidalgo, developed this toolkit, when he was still researching in my lab with Ricardo Hausman.

In the meantime, they have further developed this topic. Starting from the World Bank, they advise other countries in this regard, and they help map the given country's opportunities. This comes to the forefront in geopolitical areas as well. After all, who may manufacture or produce which good is very much determined by its environment. There are very clear clusters in this regard. For instance, the Southeast Asian cluster is very strong in computers. This is by no means a product of chance. They learned from one another, similar toolkits and knowledge is available to them, etc. As a result, capacities form. Thus, this is very much a question of geopolitics.

In the United States, a new doctrine appeared, accordingly, which is called net-war. In the next 30-50 years, all of America's wars will mean fighting against smaller groups, not a real, regular army.

In these cases, fighter planes and tanks will not be as useful. Understanding communities, mapping emotions, learning who is friend and enemy within a village will be much more important, because the civilians and militarily active population has become fully intertwined and indistinguishable from one another. We must figure out who is our friend, and who is our enemy. This is a very important paradigm shift all over the world.

Do you have any connections to security policy?

Is your model used in order to obtain information from Facebook and Twitter profiles and activities for security policy purposes?

We do not, but there are many who study this topic.

Security policy has very many different aspects. One that is interesting to network theory is this whole war on terror. These days the war on terror has been transferred to a network theory basis. After all, in today's conflicts it is not two great armies facing one another, but large armies face little groups who organize in networks.

These kinds of data are public; therefore, they are used ad nauseam for all sorts of purposes. This really belongs to the category of data processing. I am a founding member of a firm called Maven7 here in Hungary. It's a very successful firm, we have clients all over the world.

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how countries connect to one another through their minorities. For instance, there is a Hungarian minority in Romania, thus these two countries can be connected, you can build a network and then analyze it.

Of course, we cannot yet call this research. It's more like a finger exercise, but the fact that the students can do it with such ease in a four-week course shows that this is a feasible option.

I do not follow this literature much, but today ever more details are becoming available in relation to international relations, therefore the area would be relatively easy to examine.

"... year a group examined how countries connect to one another through their minorities..."

Would you say a few words about your new book which is about to be launched (Network Sciences)?

We do Twitter data processing, social network site data processing. We look at what is relevant for us from the mass of data that is available. Today this has become a separate profession. It is not routine in the sense that network-type thinking is not necessarily the heart and soul of every tool, but in more and more cases, it is. There is a constant tension between data mining and network thinking. However, network data mining tools are beginning to appear, which have absorbed network thinking. For instance, in our Boston institute we recently hired a lady whose specialty was network-based data mining in particular.

Many people see the future in the disappearance of borders. What is your opinion, will the role played by borders shift?

Borders have been eroded systematically for a long time. There are certain types of people, like myself, for whom borders really no longer play a role. This process is unstoppable in my view. Obviously, this is in stark opposition to national identity and community awareness. The question is how these local interests can be connected to these "borderless countries".

If we consider Hungary, we have interesting double

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interests: we would like our border to disappear so that Hungarian communities abroad could become part of the home country, meaning that there would be no difference between an ethnic Hungarian from Transylvania and a Hungarian from Hungary. At the same time, we would prefer that our borders not disappear, so that we could hold unto a certain national identity. This is a Gordian knot and there is no magic bullet, such as network theory, which could provide a solution. Network theory is an appropriate tool to map these various points of view, to make us understand the issue, and the effects and availabilities of potential solutions. In the hands of decision makers, it could perhaps operate as a tool, so that they can figure out what the next move is.

Is network model appropriate for international relations, or in economic interactions and their analysis?

At present, we do no such research, but our students constantly study these areas, here in Budapest as well as in Boston. I have an annual network theory course, and in it students must prepare a project working in pairs. Each year there are a few groups who make a network about relations amongst countries, then they analyze it. Last year a group examined

This is a textbook that I wrote over the past five years and I taught it in Boston as well as in Budapest, at the Central European University. As the book was being written, the chapters of the English version were published on the net. Still, interestingly, the first published book is going to be in Hungarian. Although this is of course a translation from English, but the English version will only come out in June-July. This course, I find, is actually made up of two very different communities. On the one hand, there is the Budapest community, which is made up primarily of economists, sociologists, political science students (though at times medical student also attend), whose mathematical skills are very different, therefore I show them the mathematical equations and we have a conversation about them when I teach, but I don't expect them to approach the problems from a mathematical point of view. There is a software packet which aids them in applying their knowledge to real networks. On the other hand, I teach the same course in Boston to Ph.D. students with a solid background in Physics, Computer Science, and Mathematics, for whom the mathematical derivation is also very important. So, the question was this: how to write a book that satisfies both types of audiences? I

structured the ten chapters of the book in such a way that the chapters contain formulas, but there are no proofs or mathematical derivations. I say what the formulas are good for, how they can be applied, I illustrate them with concrete examples. Each chapter has a section at the end for advanced students, which contains the derivations as well. Obviously, I wrote the textbook primarily for those who found Linked exciting, but found it contained insufficient mathematical content. This book has another interesting aspect, namely the question came up, why should it only be accessible in English? Obviously, it is possible to have it translated the classic way: the publishing house in each country hires a translator, then publishes the book. However, it is a rare instance in the scientific world to translate such textbooks, as those students who navigate in this direction typically try to read the book in English, anyway. So, by having a Hungarian translation, one and a half years ago, we started an interesting experiment. I kept the digital rights to the book entirely to myself. Thus, I provide opportunity for communities to assemble, translate the book together, and make the book available on the Internet. To help the process, we provide the entire software packet, so that the final book looks exactly the same as the original English, so that the images integrate nicely, the entire layout is beautiful and so forth.

We started experimenting with this in Hungary, and we learned a great deal from it, so we take this experience along everywhere in the world. Along with the Hungarian translation, a Chinese translation is underway (true, this happens through an official publishing house). However, we have also heard from Japanese, South American, German, and Italian groups, who assembled such communities and would like to make the book available. This is very exciting for me, as it is a new model. What is important to me is that the knowledge, the toolkit becomes available. We are trying to spread this model worldwide, eliminating the obstacles that copyright used to create earlier.

You studied in Bucharest, Budapest, and Boston, and at present you teach at Harvard and Northeastern University. What is the most important difference between the education and scientific life in Hungary and in the United States?

The differences appear on many levels. The educational philosophies are fundamentally different in the American and Hungarian systems. My children

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attend school in Budapest, so I have insight into the Hungarian school system. One difference is that the European education system is knowledge-based.

The American system however is thought-based. In the United State, we do not transmit knowledge, rather, we instruct them in how to think. It is for this reason that European students in secondary education and indeed up to the first and second years of college seem to know a great deal more than Americans. But in the long run this rate changes, as the role of universities and education is not necessarily to put a certain amount of knowledge into our hands. After all, what really remains of school: we can write, read and count. Perhaps we remember that there was

create a network, which had not been mapped before, they figure out which network this should be, then they demonstrate on this network what they learned in the course, and how well they can apply the tools.

I certainly don't sit down to examine and say hey, you, now go ahead and tell me about the basics of the Erdős-Rényi model. This they can look up in a book.

But do they understand, how to analyze a network?

Then they have learned everything necessary. If we managed to make this shift, this could be very successful. There are other aspects of this same issue. In Hungary schools, even schools in Budapest, the elite schools, struggle with tremendous budget deficits. I don't even dare to think what happens in rural areas,

a battle someplace. Everything else we forget; all fact-based knowledge is gone. We can look it up if we really need it. What is, however, crucial for us is the way we see a question that pops up, where we look for answers, and how we approach problems. In the long run, or at least in the world of research, and in other areas of life this active system that incentivizes thinking is somewhat more successful.

in villages. The same is true of universities as well.

Interestingly, when we take a look at what the Hungarian nations is proud of, it's our Nobel Laureates and Puskás. That student of mine who studied export-import questions, César Hidalgo, also created another tool, in which he took a look at the cultural exports of specific countries: in other words, what other countries are familiar with. What is the cultural export of Hungary? Music, science, and soccer. This is where we have excelled. The question is whether we can maintain this.

"... when I teach, the grades are not based on students' examinations..."

How would it be possible to "copy" this a little in Hungary? We must learn out of this in some way or another. I am not saying that we must implement something like this already on the elementary school level, but at universities drastic changes are necessary. Having gotten to know the American system, I was astonished at how simple the HungarianRomanian system really was: the whole year through we goofed off, then we prepared really hard for the year-end exam. In other words: in two weeks, we absorbed the entire material, then we were examined, and afterwards we straightaway forgot it all. In the United States, things do not work this way. There, grades represent an entire year's activities, and a student cannot afford to only prepare for the yearend exam. For the educator, this means a great deal more work. Having constant expectations where we keep testing the student, however, means much better learning opportunities for students. When I teach, the grade is not based on students' examinations.

Rather, the students typically map a project, they

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This does not mean that we should not participate in CERN's work, where Hungarians indeed perform very well. Rather, I am saying that we have certain abilities upon which we can build, and upon which it is worth building. I just randomly highlighted two fields, mathematics and brain research, and of course I would add network theory, too, where there is a lot of overlap with mathematics in Hungary, and in the long term there will also be a great deal of overlap with brain research, too. Certainly, there are numerous other fields with great potential that I have no knowledge of.

I do not write in English because I find it easier, or because in some way I have greater affinity towards the English language. I would love to write in Hungarian, but the market is elsewhere. With regards to everything that I do, my goal is that it become available in as many platforms as possible.

Do you plan to write a book in Hungarian at some point?

If I write the book in English, it can be very easily translated into very many languages, including Hungarian, so the Hungarian community is not excluded. If we think about it, Bursts is actually a very, very Hungarian book. But it was written in English. Its theme however is very strongly Hungarian, and it was a great deal more successful in Hun-

This is a question of markets. I just sent off a book proposal for my newest popular science book, and it will also be written in English.

gary than in any other part of the world, because in other parts of the world people could not identify with its story, whereas in Hungary the entire public identified with it.

If you were to decide in what scientific areas the Hungarian Academy of Sciences should finance basic research, which ones would you choose? In your opinion, in which scientific area could Hungary become world-famous in 10-15 years?

There are areas where we have no solid traditions, and there are others which continue to be important, where we must continue to invest, and where we must pay attention that the current momentum is preserved. Such a field is mathematics, or brain research in Hungary in the last few decades.

Perhaps one of the questions ought to be where have we got solid traditions, and within that scientific which specializations could become potentially even more important in the long term. I have not studied science in such depth to be able to answer this question, but the role of a leader or a thinker is really not to say, hey, here's where we need to invest, but rather he or she needs to approach the question properly.

This proper approach is to ask where the necessary gray matter is, upon which we can build and develop.

So, for instance it would be pretty hopeless for Hungary to enter the race in particle physics, as we shall never have a particle accelerator.

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MIHÁLY CSÍKSZENTMIHÁLYI: HOW CAN WE BECOME A CREATIVE SOCIETY?

Mihály Csíkszentmihályi, a psychologist living in the United States, a recipient of the Széchenyi Grand Prize, the creator of the concept of flow, arrived in Budapest at the invitation of the Pallas Athene Geopolitical Foundation to give a lecture about his specialty, research into creativity. Several hundred people attended his lecture on creativity's components, its effects on society as a whole, and about the similarities discovered among thirty Nobel Prize Laureates.

Author: Fanni Maráczi

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LEAVING A TRACE FOR FUTURE GENERATIONS I have been studying the question of creativity for over fifty years. It all started in October 1944, when I was nine years old, when we departed from Nyugati Railway Terminal, Budapest, to leave Hungary behind for good. All over the city we heard the guns of the approaching Soviet troops. We returned to Italy, where my father worked. At that time, as a nine-yearold, I was surprised that many grownups who served in high offices in our country had not known what would happen, despite the fact that they were welleducated and very experienced people. The events, and the fact that the government's entire character and structure changed completely caught them unaware. Thus, I began to seek an explanation. What was missing from the lives of these people? What could convince the rest of the population that they could live their lives in such a way that they made their own lives and society as a whole better? I became convinced that the decision was in our hands whether our lives would be brutal, short, and full of pain, or a life that is flourishing, has purpose and meaning.

Moreover, this would leave a trace on future generations. Creativity is a potential that exists in people, just as the potential for destruction and cruelty is in them. However, it is our responsibility to make sure that creativity, not destruction, triumphs.

"the decision was in our hands whether our lives would be brutal, short, and full of pain or full of purpose and meaning."

We must distinguish between two types of creativity.

One type transforms culture, the way people view the world. This is big “C” public creativity. Small “c” creativity appears in the lives of people who never get to be famous, but through its deployment their own lives are enriched and gain meaning. Here I will mostly address creativity with a big “C”, because it is easier to study, and it has a greater effect on society, or rather this type of creativity is the kind that we must make sure to preserve. Creativity makes society lively, healthy, and progressing.

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A characteristic of Creativity with a big “C” is that it is rare. Creativity does not occur frequently, statistically speaking, so it is imperative that society, or at least part of it, appreciates it. The most exciting part of my studies is how society recognizes novelty, rare occurrences, which bring about change.

Renaissance culture changed the Western world.

When we read about the Renaissance in Florence, we discover – as historians discovered, too – that the Renaissance was the work of the ruling class, and not talented youth. The talent was always there, however previously it simply did not gain recognition. The City of Florence's commitment to seek out such artists, painters, and sculptors so that they could decorate the city is something quite incredible. These artists could come from anywhere, they could be rural kids who appear to be talented, so even I had a chance.

They were sent to schools and taught how to use techniques and materials. All of this came to exist because society learned to recognize, teach, and enjoy excellence, those rare talents.

TEN THOUSAND HOURS AND ONE MORE This work then must be completed. The big idea itself, that we then forget, is not Creativity with a big C. They say a person needs ten thousand hours to become a master of a subject, whatever this subject may be: geometry, biology, painting or music.

However, this is not yet creativity. A creative person surpasses mastery.

It is important to emphasize that creativity is not an isolated phenomenon that happens on its own in someone's brain. It has to be the synergy of the entire system. In the course of big “C” creativity you can change the symbolic representation of some part of reality, be that physics, biology etc. The individual can enrich the community's experience as it relates to that domain, a separate realm of skill. Creativity may change this domain and its rules, it may change how we use numbers, instruments, colors, and sounds.

Creativity means that a person is able to learn to work within a domain, then become that domain's expert after ten thousand hours, and then, once he has learned all this, he sets out to change it, and people say: "Well, I have not thought about it that way before, but this method is indeed better."

Creativity is made up of three elements: the first is culture – where rules and the domain are embedded.

RUBIK’S IN THE SHED Ten years ago, we were driving with my family in the Rocky Mountains in Colorado. There were no people, no cities, just bears and all sorts of other animals as far as the eye could see. Our car overheated and we wanted to change the water, whereupon another vehicle stopped and asked what the problem was. We began to talk, and to my great surprise it turned out that this man, who lived nearby, was the curator of a small town's Rubik’s museum. He knew that Rubik’s cubes came from Hungary, but aside from this he only knew that it was a magic cube that people played with all over the world. The museum was located in a nicely painted shed and they had cubes from all over the world. Some of the cubes were signed

by Rubik himself. This man's imagination advanced as far in the civilized world as it possibly could. This is big “C” Creativity.

The second is that man who learns the rules but thinks he could do things differently. For instance, Albert Einstein responded to the question of what motivated him to create the theory of relativity by saying that he could not understand physics the way it was taught back in his day, so he came up with the theory of relativity. The creative person realizes that there is something missing, something that is hard to understand and says: why don't we find a new method?

This is where creativity begins. The experts are the third element. When a society is not creative, when there are no new ideas, products, lifestyles, that is not because there are no smart and creative people, but rather because those in power do not want change. The experts decide on the new ideas that are imported into culture, which owes its progress and complexity to this process. The next generation can use it for its own success, or they might also create novelties, and make decisions about whether they would continue teaching them.

This model also applies to smaller-scale systems.

For instance, if we think of a business or a school, or any human community, all of these have their own culture. A common knowledge, traditions that belong to a firm or a school. Most workers may only be there because of the income, and they keep the system running. But then there are those individuals who wish to improve the system with new elements.

If the company management takes no notice of its employees' good ideas, it slowly excludes the company from progress. If they accept too many ideas and import too many novelties, that may have a destructive effect on the company's future. The management must know which ideas to choose and it must integrate them into the company's culture.

When studying people, we quickly realized that we always strive to conserve energy: we repeat things as always, we eat the same things, we spend time with those whom we love. This is a conservative tendency.

After a while, however, we like to transcend our own boundaries. We want to do what we do better, with less effort and greater precision. This is a spreading tendency, and this one is more important when it comes to creativity.

When creating something new we need free attention. The debate continues to this day about how much information a man can process in a single day.

A good estimate is about half a million pieces of information: these are things like hunger, being hot, signals coming from the environment or inside – your memories, your imagination. This information is all caught by your brain. If all this information relates to work, food, and bathing, and you spend your waking time doing irrelevant things, then nothing new can come to be, and no one will recognize your talent.

WHY DO PEOPLE WANT TO BE CREATIVE? We have a tendency that we want to perform better.

Creative people learn to enjoy what they do. They don't only do it for the money anymore. They want to do it better, in a way that no one had done it before.

In the creative people who I investigated, all had a kind of joy. This is one of the most exciting things that makes up flow.

Flow is the feeling we get when we are doing something in the best possible way. Something we must do and we do it better than anyone else. We get support from other people, so we continue and we achieve such things where everyone says: this is outstanding.

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MIHÁLY CSÍKSZENTMIHÁLYI: HOW CAN WE BECOME A CREATIVE SOCIETY?

POLITICAL FORCES BEHIND CREATIVITY The first Egyptian dynasties were very creative, but then they decided that because they were much stronger and richer than other countries they no longer want change. The pharaohs created an entire office whose function was to go from artist to artist and to punish them if they were caught doing something new. Thus, Egypt's rulers preserved the culture's status quo, in contrast to the first dynasties who changed and progressed. This is the responsibility of experts and leaders.

Those people in Florence who had those new buildings built and ordered those paintings and sculptures, were the big banking families and the leaders of the unions of the age, the guilds, workers of the cotton and the textile industry, who were proud to support the city's beauty. They donated the money so the best artists could be hired. A society becomes creative if there is a political system that recognizes and supports novelty that deserves support. It is not simple and it is very rare that a society gets to the level where it has the opportunity and the political ability to foster good ideas.

Flow has a characteristic where you must know what next step is going to be, what is needed. Whether you are a pensioner, a sportsman, or a businessman, you must know what you must do. You get information regarding whether what you have done was good.

So, you need clear goals and immediate feedback.

For flow, you must feel that you are doing exactly what is needed. If you must do more than you can you would feel bad, you would be worried. If the task is too simple, you would be bored. Once you have these elements in place, you need to focus. In that situation

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you forget about the future and the past. You are in the present. You feel that you can do what is needed, you don't feel that you must do it, you only feel that you are doing it. Time passes by very fast, you take no heed, then you look up and you realize that half a day has passed and not half an hour. You forget yourself, you don't think of yourself, your work, or your paycheck, you don't worry about your career, you just focus on what you do. This is flow, the state of creative people when they work.

We must recognize this. No matter how far we can see, how deeply we understand something, it is because we are standing on the shoulders of previous generations. Creative women typically have feminine traits, but they are also strong and competitive. Men tend to be more sensitive, they are more interested in emotions. From childhood, onwards we see two different realities if we are boy or girls. This is what we teach our children as well. Creative people can use opportunities, because they are not constrained.

Let's take rational thought – acting in the interest of pure results. This is a distinguishing trait of creative people, but at the same time they display a kind of childlike naivety. Their ideas go in unexpected directions, and this is not something you can expect of a grown-up. Goethe was asked to explain how he became the genius of German poetry and he responded that he still sought to preserve his childlike naivety.

They can think rationally, systematically, and they can think like a child. These people are playful yet disciplined and responsible in their work and in their lives alike.

From among the thirty Nobel Laureates I wrote about, six or seven spent some time in prison, as they did not function according to the expectations of the system.

Linus Pauling was arrested because he participated in a demonstration against nuclear weapons, when he laid across the railroad tracks. Egypt's single Nobel Prize Laureate Naguib Mahfouz was knifed

by Muslim extremists on the street, because he had written about the future uncertainty of Egypt's Muslims. He was punished for not being a fundamentalist, but he said that he simply had to speak his mind. He almost died, but he managed to recover.

AGONY AND ECSTASY Passion is crucial even in the sciences where we have to be cold and rational. But creative scientists are very passionate. They notice things that others don't, they are very interested in what else they could discover. In this they resemble great poets. I translated the poems of Salvatore Quasimodo, an Italian Nobel Laureate, into English and I changed certain words so that they sounded better in English. He sent them back to me saying that these were different in the original. Not a black bird, a raven. He was very careful with concrete words, in the details of language, how he wanted to represent reality.

Years ago, a book on Michelangelo's life became a bestseller. Its English title was The Agony and the Ecstasy. It addresses a duplicity in Michelangelo's life: he did not know how to express himself, so he had to make compromises, live in a fashion he did not want to live. The ecstasy he felt when working was one of a vision appearing.

This is the life of creative people – agony and ecstasy, uncertainty and suffering, because the world is not yet mature to receive their ideas. But there is also joy and satisfaction, which they feel when they have accomplished something they did not know it was possible.

These are the traits of creative people. If we want a more creative society, excitement and progress in culture, the problem is usually not that there are no people around who think that way. Rather the problem is that they have no chance to express themselves, they have no support and no access to the right instruments.

For big “C” Creativity we must become a creative society, like Athens or Florence used to be. The fact that the Hungarian National Bank chose Pallas Athene is a good sign. We need a vision for the future, which leads us to a better history, to a better era for humanity. This is the challenge that we are facing.

Reality and imagination are also very important.

The traits of creative people show that creativity comes to be when opposing forces meet. We think that these are introverted people working alone.

This is true, but they are also very curious about how others work. Not because they want to imitate them, but because they think they could learn something.

Society is very important for scientists. If you think with others, the continual interaction with others is indispensable.

Ambition – these people are competitive and at time arrogant. Isaac Newton was once asked how he could see so far where no one else could – they were thinking of discovering gravity, of course. He said it was because he was standing on the shoulders of giants.

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SUGATA MITRA: THE REVOLUTION OF EDUCATION Author: Fruzsina Simigh

EARLY SCIENTIFIC WORK Sugata Mitra received his Ph.D. from the Indian Institute of Technology (IIT) on Solid State Physics in the 1970s. During his doctoral research, he discovered that the structure of molecules determines their function more than the constituent atoms.

After completing his Ph.D., he began researching energy storage systems, first in the Center for Energy Studies at the Indian Institute of Technology, then at Technische Universität, Vienna, Austria. This scientific pursuit resulted in a new design for zinc-chlorine batteries (1982), which is used by the military. In addition, he studied the flow of electricity through biological systems, computer networks, the human mind, memory, and learning. Mitra was one of the first in the world to show that stimulating nerve networks can help decipher the mechanisms of Alzheimer's disease (1994).

THE FUTURE OF EDUCATION Sugata Mitra is the initiator of Minimally Invasive Education (MIE), a pedagogical method which in essence advocates that children

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learn in unsupervised environments from experiments and experiences that they themselves dream up. He proved this by the "Hole in the Wall" experiment, which started out in 1999 in a district of New Delhi, and was eventually expanded to include other countries as well. In this experiment Mitra literally put a "hole in the wall" and left a computer for the slum's youth to use as they wished to. It quickly became clear that free and public access to a computer and the Internet provided to a group of children results in the children independently developing their computer, English language, and learning skills such that it improved their school achievement. Moreover, their ability to interact socially was affected as well: they formed individual opinions and value systems.

Mitra developed this method further in the SOLE (Self Organized Learning Environment) program. He gave a talk about this project at the Budapest Brain Bar in 2015. Mitra showed that, building on a spontaneously formed order, children can be left alone to learn under minimal external intervention. There is no need to spoon feed them information and knowledge. If we let the children form groups themselves in order to answer an appropriately stimulating,

photo: Campus Party Brasil

Sugata Mitra, the Winner or the 2013 TED-Prize, was born 12 February, 1951 in Kolkata, India. Currently he is a professor at the School of Education, Communication and Language Sciences at Newcastle University, and chief scientist of NIIT, an Indian multinational company focusing on education and training. Sugata Mitra became famous with his research entitled "Hole in the Wall". Numerous studies on education and public education cite the method of this renowned expert.

complex, but smart and interesting question, then we will see such marvelous results as young school children understanding how it is possible, according to SchrĂśdinger's theory, that when we throw a ball at the wall that the ball may drop down on the wall's other side. In addition, Mitra saw that children retain an extraordinary amount of information, because if a question awakens their curiosity, then they continue the research at home.

The SOLE method and cloud-based learning may reform the education system: it might motivate reform of the examination system to spur students on to creative problem resolution instead of accumulating

factual knowledge, which corresponds a great deal better to teamwork at the modern workplace. Moreover, it motivates the questioner to pose ever more complex questions that focus on research, not just the answers that the Internet browser lists as first hit.

It is of paramount importance that we do not enforce learning, but we simply let it emerge in groups, in chaos that slowly becomes more systematic, creatively, without supervision. With adequate pointers and motivating support people's natural curiosity and adaptability finds the answer to any question, be that about the English language, the mysteries of Internet browsing, or plate tectonics.

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Author: Zoltán Cséfalvay

Originally, this book was intended to be a journal of the days spent in the OECD. But as the number of posts was growing, it was becoming increasingly evident that we were living in the years of a change of era. When does a new era begin? When our old notions do not work anymore or we need to twist them so much that they get farther and farther away from reality. We use the notions of the era of globalisation – such as international trade, work productivity or the sector of small- and middle-sized enterprises –, which hardly fit the world of robots, digital giants, new global value chains, platforms, the networks of several hundred million users and dynamic start-ups. Perhaps we will have a better understanding of the transformation around us if we turn the point of view, and we start from what we can see: the most important characteristics of a new era.

AT THE DAWN OF A NEW ERA

There is almost complete agreement about the fact that in our days we are living in a very fast series of technological shifts, to which we are almost unable to adapt. Irrespectively of the number of the great transformations we regard it to be in the series of industrial revolutions, obviously,

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– new technologies (e.g. robotics, 3D printing, Big Data, Internet of Things); – new economic principles (e.g. services based on internet platforms); – new consumption patterns (e.g. collective consumption); – new employment models (e.g. self-employment); – new battlefields (e.g. in the automotive and hotel industry); – new generations (e.g. generation Y and generation Z); – new myths (e.g. post-capitalism, the sharing economy, extreme market capitalism) and – new dynamisms (e.g. start-ups, open innovative ecosystems) have emerged.

On the other hand, however, data show that the determining economic process of past decades, i.e. globalisation, started in the 1980s, have lost momentum.

It indicates that since the turn of the millennium, the growth of economic productivity and international trade, and since the global economic-financial crisis of 2008, the pace of economic growth has been gradually slowing down or stagnating. At the same time, the negative side effects of globalisation have been felt. From the turn of the millennium, income and territorial inequalities have been continuously increasing worldwide, and the gap between the frontrunners – i.e. innovative countries, regions, and occupational groups able to swiftly increase their economic productivity – and the majority unable to do so.

“This book is based on one single principal thesis: while the period from 1980 until the end of the 2000s was the era of globalisation, in the 2010s, we have entered a new era, the era of technology.”

The main questions of the book include: – What will this transformation bring about in the economy, in employment, in the operations of companies, in the economic policy of the state, and in our everyday lives?

– What does this change of era mean for the different regions of world economy, the developed and catching-up countries, and of course, for Hungary?

– How is this transformation interpreted and evaluated by the determining professional workshop of the world, the Organisation for Economic Cooperation and Development, and how is it fed into the daily disputes taking place in Paris, hosting the OECD? This new era will produce its winners and losers as other eras have done earlier. For Hungary, it is a question of crucial importance how we can be among the winners of this change of era. The first step of the way leading there is exploring the main characteristics of the new era.

NEW TECTONIC FRACTURES Robotics, automatisation and digitalisation will radically transform the currently known structure of the world economy in the near future.

– Although the fears that “robots will come and take our jobs” have come to the forefront of public thinking in developed countries, these changes are likely to dramatically affect developing countries.

Jobs where robots can actually replace people were outsourced into developing countries exactly during the era of globalisation. Consequently, for example in Southeast Asia, hundreds of millions of

people have escaped the trap of absolute poverty, many of them have even got to as far as the gate of middle-class prosperity. This trend is likely to be disrupted by robotisation and automatisation, endangering tens of millions of jobs as well as the slowly unfolding economic catch-up process at the same time. Its first sign is that the catch-up model of the era of globalisation, which was built on the import of technologies, and as a pre-requisite, the opening of markets, foreign direct investments and the liberalisation of the economy, seems to be closing. The new era will (or might) start such a wage competition between robots and humans with which developing countries cannot (and do not want to) keep pace. They are left with deindustrialization and the enhancement of the service sector without having got into the top tier of middle income countries by means of industrialization in the era of globalisation.

– One advantage of new technologies is that they might make industrial production return to developed countries. It might return to consumer markets, but with automated factories requiring a relatively low number of and highly-skilled workforce.

To put it bluntly: jobs that were outsourced from developed countries into developing countries in the era of globalisation will never return. In addition, new jobs can be created in industrial production only if, in terms of training and skills, manpower is competitive with the needs required to operate robotised factories.

– Another major challenge that developed countries have to face is that automatisation and digitalisation is gaining more and more ground in services as well, endangering millions of routine work tasks requiring a low level of qualification even today. In the era of globalisation, developed countries compensated the loss of industrial jobs with the service sector. In this sector, however, due to its very nature, the growth pace of productivity is lower than that of the industry. In part, this also accounts for the erosion of the lower layers of the middle class. New technologies are now threatening to eliminate vast numbers of routine-like jobs requiring low qualifications in the service sector in developed countries.

Challenges affecting developing and developed countries – as a consequence of the change of era – indicate the two sides of the same coin. Developing countries are facing the problem of too early deindustrialisation, and developed countries are concerned by the troubles of excessive deindustrialization.

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“For Hungary, it is a question of crucial importance how we can be among the winners of this change of era.”

NEW GLOBAL VALUE CHAINS

Internet of Things, augmented reality, and 3D printing, however, it has been revealed that robots are and will be even more able to take over also non-routine physical and intellectual work from humans. The command of this era is simple: everything that can be automated will be sooner or later automated. For people, work processes requiring – creative intelligence (innovative, critical way of thinking and problem-solving) and/or – social intelligence (ability to collaborate and communicate) will remain.

The system of global value chains, i.e. building networks of production and value creation embracing

As a contrast to phantasms, the expansion of robotization and automatization will not necessarily bring

many countries, companies and premises, from planning, procurement and assembly to sales and repair, is the greatest innovation of globalisation. Conversely, in the era of technology: – the centre of gravity of value creation within global value chains is shifting gradually towards digital technology and content (as much the process proceeds, as much value creation drifts away from its concrete geographical location); – technology – with decreasing the complexity of products and with custom-made, low-volume production tailored to consumers’ needs – recreates the possibility to produce close to the consumer market; – global value chains are “democratising”: with digital technology, the opportunity to build and operate one will open up also to smaller enterprises (as an opposition to the era of globalisation, when this was limited almost exclusively to transnational large companies).

about massive losses of jobs and occupations. However, the jobs, occupations and work tasks remaining to people will radically transform in the near future.

The real question is how prepared we are for the transformation of occupations in terms of training and capabilities? How can we win the race between technology and training?

To put it bluntly: in the era of technology, intangible assets and services are placed in the centre of value creation, while global value chains will be virtual, shorter and more “democratic”. Today, developing countries are losing in this transformation, but developed countries will not gain automatically a winning position, either.

NEW CONSENSUS ON THE FUTURE JOBS AIn the era of globalisation, the idea that robotization, automatization and digitalization would basically concern simple, routine-like physical and intellectual work processes and occupations seemed an almost irrefutable consensus. With technologies, such as artificial intelligence, Big data analysis, the

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WAITING FOR NEW ANSWERS Creative and social intelligence is not equally distributed in society, thus in the future vast masses of people are likely to be placed at a disadvantage against technology and robots, in terms of wages.

There are several, still mostly experimental policy solutions for its challenges. As always, these have a redistributional version and a free-market one: – robots or their owners should be taxed, making the guaranteed basic income financeable (also for masses of people losing their jobs due to a lack of abilities), which can be either unconditional or conditional; – as many people as possible should become owners of robots, which can be collective – state, co-operative or small community – ownership, but it can also be individually accumulated property; – let’s trust our comparative advantages, that is, let’s develop the skills and abilities – i.e. our creative and social intelligence – with which robots will never be able to compete, which can also mean large-scale state training programmes and educational reforms, but can also mean the independent and on-going learning of individuals.

These solutions might seem futuristic today. However, it is more appropriate to prepare for changes in time, before they evolve into an unmanageable stack of social problems.

A NEW GROWTH PARADIGM In the same way as the establishment of global value chains was the great invention of the era of globalisation and the engine of economic growth, a new economic innovation has appeared in the era of technology, and this is digital platforms. The key to growth, with a notion from economics, is a two-sided market, characterized by: – two different products or services being on the two sides of the market, on the demand and supply side (as opposed to a traditional market, where demand and supply meet at the same specific product or service); – different demand and supply being harmonized by a digital platform, by algorithms or managing Big Data bases (e.g. a Google search engine providing information for users about the notions or web pages that they are searching for, while on the other side, providing advertising opportunities); – a digital platform being interested in as great network of users on both sides (demand and supply) as possible, since the growth of the two networks enhance each other, albeit to a different extent; – attracting specific user’s groups by cross-funding (usually preferring a more price-sensitive network, even up to being free of charge);

– maintaining independent market organisation rules and an independent governance system in order to operate and keep users on the market; – being extremely effective, since it handles digital products whose cost of production, storage and distribution is marginal, that is, the amount spent on a new specimen of a specific product is kept to the minimum, is almost zero.

The dynamics is characterized by the fact that we have hardly got used to the world of GAFA (Google, Amazon, Facebook, Apple), the new stars of the platform economy have already emerged; using another acronym, they are the NATU giants: Netflix, Airbnb, Tesla and Uber. What is more, Chinese platform giants, such as Baidu, Alibaba, Tencent and Xiaomi, forming another acronym, BATX, are also emerging rapidly.

NEW ECONOMIC PRINCIPLES The appearance of digital platforms has initated five radical changes: – u se in lieu of ownership, – services in lieu of industrial products, – increasing the efficiency of the market in lieu of the productivity of production/manufacturing,

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– platforms in lieu of corporations; and – it has brought self-employment to the fore in lieu of employment related to corporations.

It is a more or less explicit intention of digital platforms to convert everything, even traditional industrial products into (digital) services. In this competition, they are winning against the traditional economy, owing to, among others, their three big advantages: – fi rst, they render market transactions and the alignment of high-volume demand and supply much more efficient with sophisticated algorithms, Big Data bases and large user’s networks (they do not make production and manufacturing more productive – in the era of technology, it is expected from robotics and automatization); – second, platforms radically reduce the costs of market entry in specific areas by connecting demand and supply quickly and cheaply, making market entry – without traditional companies intervening – possible even for masses of private individuals; – third, digital platforms pull value creation towards themselves by sharply increasing the efficiency of the market and decreasing market entry costs.

Again, the command of the economy is ruthless: those who can fulfil a task in the value chain more

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efficiently will sooner or later get into a better and a leading position within the chain. Earlier, this position was held by industrial producers or large branding companies. Now, with the platforms being able to operate and organize the market much more efficiently than the companies of the traditional economy, platforms also think that their time has come. Soon, digital platforms are likely to become an economic and social force akin to that of factories during the past industrial revolutions.

NEW BATTLEFIELDS Digital platforms convert everything that they put their hands on into services. Nowadays it is the automotive and the lodging and hospitality industry’s turn. For example, adopting the principle of “the car as a service”, we can encounter a whole range of solutions based on platforms: –d river’s service a (e.g. Uber, Lyft), –c ar-sharing systems (e.g. Zipcar, autolib‚ Äô, Car2Go), – rideshare (e.g. Zimride, BlaBlaCar, Carpooling.com) and – peer-to-peer car rental (e.g. RelayRides, Drivy, Tamyca).

Some of them, such as driver’s service platforms, are threatening existing markets and businesses, while others, such as car sharing and rideshare systems, rather open new markets.

NEW GENERATIONS

Another challenge concerning the automotive industry also comes from digital technology: driverless cars. Today – despite the growing weight of installed electronics – most value, some 70 per cent, is added to cars by carmakers.

However, in the driverless cars of the future: – traditional carmakers’ share in added value can decrease to 40 per cent, while – 40 per cent of added value is provided by the manufacturers of hardware required for limitless mobility based on digital connections (e.g. Apple, Samsung) and of software indispensable for managing big data bases and geographical locations (e.g. Google, Tesla, telcos)

Perhaps there is not such a clear boundary between the era of globalisation and that of technology as the one indicated by generational cultures: – The classical type of the era of globalisation was the relentlessly performance- and result-oriented, materialistic and a bit hedonistic yuppie, driven by their hunger for profit, usually working in and getting rich from the financial sector.

– On the contrary, members of the generation Y (born between 1981 and 1995) and generation Z (born after 1995) are perhaps less materialistic than yuppies were, and much more open to com-

– 20 per cent is added by platforms providing and organizing mobility (e.g. Uber, Zipcar, Car2Go).

munity solutions, and as such, platforms based on community sharing.

However, it is more than merely the changes of proportions. In the case of self-driving cars, the companies providing related digital services and contents and software manufacturers will have the greatest profitability and marginal profits, while traditional car makers might get stuck into the low-profitability segment of the new car making model.

Naturally, those who expect the death of capitalism everywhere, see the new generations as the grave-diggers of capitalism. However, there is a great difference in technology and the way it is used. Members of generation Y and generation

The platforms that have appeared in the lodging and hospitality industry, including homestays (e.g.

Airbnb, HomeAway, 9flat.com) and service-provider platforms related to tourism (e.g. EatWith, ToursByLocal), have radically reduced market entry costs and made it available for private individuals directly, easily and cheaply. Their common feature is that they partially eliminate traditional market operators. These platforms will always be in advantage against traditional corporates (e.g. hotels, travel agencies) because: – private individuals do not make their temporarily unused assets accessible to others according to return of capital expectations of the market, – there are no fixed operating costs payable on providing access (as opposed to companies) and – often these activities are not taxable, either.

At the moment, the battle is fought in the field of regulation. Traditional and rigorously protected sectors – such as taxi drivers or lodging service providers – rely on state control and regulation. Digital platforms refer to user’s feedback, its market cleaning and managing role, that is, reputation.

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– d ue to an almost zero marginal cost, the “democratization” of the production of digital assets, and 3D printing technology, we can be producers and consumers at the same time in a growing number of fields, from energy supply to objects of everyday use; finally, – robots and automatization will render production so efficient that social welfare can be provided for everyone without work and jobs in their current sense.

The arguments look logical at first sight: if something has an almost zero production, storage and distribution cost, and we can get this product for “ free”, because it has no market price, either, we can hardly talk about commodity-market capitalism. If we can be producers and consumers of several products at once, there is no need for markets or capitalist companies.

To put it bluntly: according to ideology-based myths, today we are entering a new world in which the market will not be dominant, and we can bury capitalism, which is a great pleasure for ideologists, since anti-globalisaton movements were unable to do so.

Z are digital natives indeed, growing up with this technology from their early childhood, and for them unlimited global and mobile communication equals with everyday life.

Global connection, however, is more than a mere hobby or pastime; it is essential for positions and careers awaiting for them in the age of technology.

While the previous generations pursued several occupations – consecutively – during their lifetimes, members of the generations Y and Z simultaneously do several money-earning activities, and will tend to pursue various career paths at once. This – compared to the previous one – more uncertain but at the same time, slasher career lifestyle is not just enabled but forced by technology.

NEW MYTHS – THE DEATH OF CAPITALISM During each change of era – including the beginnings of globalisation in the 1990s – new myths are born. As we gradually proceed into the era of technology, there is a growing number of myths.

– V isions built on ideology – we can say, almost naturally – are expecting the death of capitalism.

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– I llusions woven from sentimental dreams envisage a future relying on sharing and community use.

– P essimists project an ever-extreme market version of capitalism.

Ideologists think it is a precursor of the death of capitalism that a widening range of assets and services is available for free in the digital economy even today (e.g. Google, Gmail, Chrome, Skype). There are four phenomena behind this: – a lmost zero marginal cost, which means the cost of manufacturing another product that is digitally produced or that has digital content (e.g. music, video, software, e-book) is practically almost zero, after the return of one-off development costs; – t he logic of a long supply curve, referring to the fact that not only the manufacturing cost of a new unit but also the storage and distribution cost will be near zero, ensuring long, almost infinite supply and, at the same time, will also democratize the production of digital assets (e.g. YouTube, e-books);

The slogan of “there is no free lunch” will go down the rabbit hole of the past, defeated by technology. The problem is that nowadays digital platform giants providing their services for “free” are companies listed in stock exchanges with capitals of hundreds of billions of dollars, with an annual profit of tens of billions. Economy seems to operate in a way different from the one anti-capitalist myths would prefer.

NEW MYTHS – A SHARING ECONOMY Illusions made of sentimental dreams do not go that far: a new type of economy and society will evolve, based on sharing, community use, and the collaborative and co-operative production of goods and services.

Common attributes of these solutions are: – they establish a direct connection between private individuals offering goods or services and seeking them (peer-to-peer economy); – private individuals offer their goods and abilities not used temporarily or fully, and they share them or their use – temporarily – with others (sharing economy, on-demand economy);

– the goods and services offered are often used not only by individuals but a co-operating group of individuals (collaborative consumption); – the mediation between the private individuals’ demand and supply is done by digital platforms, based on Big Data bases and sophisticated algorithms (platform economy); – members of the generations Y and Z are the main users of community solutions, who, the illusion says, are less materialistic than the members of the previous generations.

Again, the appealing arguments seem logical at first sight: if digital platforms diminish the conditions of market entries to such an extent that millions of private individuals can directly establish economic relationships with each other, it is not just faster and cheaper than the traditional market solution, but capitalist companies are not needed anymore, either. That is, a community Kanaan will come.

One problem of the vision of the community economy is the same as that of the myth about the death of capitalism – again, there are ruthlessly profit-oriented digital platforms in the background. What seems to be the community sharing or use of goods at first sight – such as car share (e.g.

Zipcar, Drivy, Car2Go) or accommodation or home share (e.g. Airbnb, HomeAway) – is actually nothing else than short-term rental between private individuals. Basically, community economy is not about the community share of property but the coordination of the knowledge of market operators, now the masses, and the enhancement of market efficiency. Platforms have not replaced capitalism with a new, community economy; to the contrary, they made the market and the market economy more efficient.

NEW MYTHS – EXTREME MARKET CAPITALISM Finally, according to pessimistic visions, platform companies simply sell utopian dreams for money, e.g. the hopes lain in the community economy of the future. The argument is that by managing the market much more efficiently than before and radically reducing the conditions of market entries, the platforms, in fact: – market reciprocal human relationships (e.g. instead of a lift as a favour, a payable carpooling system of BlaBlaCar);

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a nagy korszakváltás

– guide job-seekers towards self-employment, which is occasional and lacks social protection (e.g. Uber, Amazon Mechanical Turk, TaskRabbit); – are driven by the economic efficiency of networks and therefore establish monopolies and corporate empires larger than ever before (e.g. GAFA, NATU, BATX); – make people vulnerable with the huge data bases collected about users, with which everything is known about them (e.g. Digital dictatorship, "Big data = Big Brother”).

The future vision of extreme market capitalism, however, seems to mismatch the scale. Platform economy – although it is a serious challenger – has not defeated the traditional one in any field, but rather completed it in most of them. People belonging to the lowest segment of the labour market, characterized by low qualifications, could find only badly paid, seasonal, occasional work earlier as well, and platforms have made their access to the demand for them at least faster and simpler. Due to network effects platforms do grow quickly, but because of the fast changes in technology, monopolies of the digital economy are more short-lived today than in previous eras.

We leave masses of data behind on digital platforms, which, after correlation analyses, can even predict human behavior, but it does not mean that knowledge of cause-and-effect depth is accumulated about us. Finally, we should never forget the fact that technology, including the world of platforms, has been and is created by humans, thus the direction of its development also depends on human society.

NEW DYNAMISMS Finally, the era of technology promises to bring new dynamism into the economy and the society, because, among others, this era can make innovation more open, democratic and massive, compared to the current one. When it comes to innovation, we tend to: – overvalue the role and intellectual achievement of researchers and developers, and, simultaneously, undervalue business solutions and the role of launching a new product on the market (although the main point of innovation is the path an idea takes until it gets to the consumer, for which an entrepreneur is indispensable);

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“a new type of economy and society will evolve, based on sharing, community use, and the collaborative and co-operative production of goods and services” – overvalue the results of individual innovators or entrepreneurs, and undervalue the performance of teams behind the innovation (although there is usually a small team, with the headcount of a start-up, behind most innovations); – overvalue the role of large corporations and undervalue small start-ups, sometimes merely because they are small, even though we can expect only incremental innovations from large companies, which are the prisoners of their earlier successes, while almost all radical, disruptive innovations are delivered by start-ups.

Digital technology and unlimited, global and mobile communication, however, open up the opportunity for innovation to break away from the elitist idea which evolved around it in the mid-20th century. The future lies in an innovation process in which masses participate, and which is based on a bottom-up approach and is open to everyone.

The greatest virtue of innovation is – as it has been long known – bringing unmatched dynamism into economy and society. Naturally, in itself it is just an opportunity, the implementation of which requires: – competition (the greater the competition is, the more companies are forced to succeed on the market by way of innovations – and not their monopoly–, and the more room start-ups coming up with radical innovations will have); – a flexible labour market (because with mobility, it is able to handle the dynamism of terminated and newly created jobs, as Joseph Schumpeter has put it, ‘the creative destruction’); – good education (because without it, there is not such human capital which can create internationally competitive innovations, and even the skills

and abilities required to be able to compete with robots and automatization will not evolve).

In the era of technology, winners will be the countries that create the conditions necessary for it – competition, a flexible labour market and good education – as soon as possible. Globalisation is accompanied by, among others, the territorial outsourcing of economic activities, often into countries competing with cheap workforce. Thus, it is often a zero-sum game that we can hardly win, unless we want to be cheap outworkers forever.

On the contrary, the development and application of technology is a positive-sum game. To put it very simply: while globalisation is about how one person’s work can be substituted with the work of another person living in another region of the Earth, the era of technology promises the chance that technology can be complementary to human

work and a tool to create new values. For Hungary’s catch-up it is crucial to use new technologies and the new era of technology to create new value.

According to a quote by Nobel Prize winner economist Paul Krugman, ‘Productivity isn’t everything, but in the long run it is almost everything’. In a longer term, the only path to the growth of welfare leads through economic productivity and the increase of newly created value per employee. And the key to increasing productivity – and with it, the dynamism of the new era – is innovation. The 20th century was the century of the welfare state building upon the earlier industrial revolutions, of welfare re-distribution, and of John Maynard. The 21st century will be the century of innovation, innovative entrepreneurs and Joseph Schumpeter.

Paris–Sukoró, 2017

The author, Zoltán Cséfalvay, is a university professor, Minister of State for Economic Strategy at the Ministry for National Economy from 2010 to 2014, the Permanent Representative of Hungary to the OECD and UNESCO since 1 st October, 2014. His book, The Great Change of Era was published in June 2017 by Kairosz Publishing House, with the support of PADA (Pallas Athéné Domus Animae Foundation).

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TECHNOLOGICAL VISIONS – 2050 Author: László Gere

Technological development is a continuous process, but since the second half of the 20th century we have been witnessing changes that are faster than ever before. Almost all researchers agree that the acceleration of innovations will not stop, but rather it will speed up. Therefore, technological changes are perhaps the most difficult to forecast. There surely will be solutions in 2050 that have no signs today.

There are developments that do not yet work, or not with the efficiency required for their spread, but in a 30-year perspective this is sure to change. This analysis is mainly focusing on these key areas.

MEDICAL SCIENCES / BIOTECHNOLOGY Child mortality is expected to substantially decrease in the future. Between 1990 and 2012 there was a significant decrease from 90 thousandths to 48. This tendency is going to continue down to even 31 thousandths – as the Copenhagen Consensus Center’s assessment puts it. The most dramatic decrease (due basically to the currently very high levels) is expected in Africa.

According to the Business Insider, taking the current medical science trends into consideration, several diseases will be curable or prevented by vaccination by 2050. We understand better how our immune system works, what its relationship with viruses is, we will be able to cure for example Alzheimer’s disease and treat cancer (with nanoparticles for example).

With the computerisation of the human brain we can achieve “eternal life”. Brain researchers and neurobiologists say that by 2050 the human brain will be uploadable to computers, theoretically our mind can live forever in a robotic body or as a hologram. According to several futurologists, the necessary technology will be available for this by then, although some consider that it will be a privilege

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of the richest. Around 2075-2080, however, it may become a routine procedure.

Artificial organs have already appeared at research level. The isolation of stem cells made the reconstruction of any body cell possible; in the future, they will be used to build tissues and organs as well. The development and mass application will happen in the foreseeable future. With the spread of artificial organs, bodily deficiencies will disappear, which means a significant progress if we take into consideration that in the US alone an average of 18 people die every day while waiting for organ transplantation. Organs grown in labs would provide a solution for this problem, and the required technology will be available within 30 years (such organ transplantations are already being tested).

Genetic engineering enables screening for genetic disorders: in 2050 we may be able to “create” genetically perfect people, to determine even the tiniest features like teeth, height, hair colour, eye colour or eyesight. The supporters of genetic engineering claim that this is not different from teaching our kid to play a musical instrument, because both are aimed at developing a skill. Similar to several medical breakthroughs and innovations, the massive expansion of this is obstructed by legal and ethical concerns rather than technological feasibility.

“there surely will be solutions in 2050 that have no signs today” ROBOTICS / ARTIFICIAL INTELLIGENCE Now researches are conducted into the development of freely moving robots that surpass people both physically and intellectually, and are capable of managing whole companies on their own. People can have more time for social, recreational and artistic activities, similarly to the current retired or well-off classes. Artificial intelligence already exists; it is used every day. It is not just Apple’s Siri, IBM’s Watson or the Google Now assistant, but it is present in everyday devices like a washing machine, too. Today a washing machine with appropriately developed electronics is already capable of nearly human behaviour, it can individually assess the situation and work out a response based on the data measured by itself (this is the so-called Fuzzy technology, with which the

device is capable of modifying its working while in operation, if it detects something that differs from the optimal).

The term ‘machine learning’ related to artificial intelligence shortly means that a system is capable of recognising regularities and rules by observing patterns, then making decisions based on them.

Applying the algorithms of machine learning will be indispensable for companies to retain competitiveness. The technology is already applied in several areas, from spam detection through character recognition to photo labelling and different analytics (it can optimally be used for analysing big data, basically this was the reason for the emergence of the need for machine learning).

With the understanding of the functioning of the human brain, artificial neural networks will also be possible to create, which will mean a new breakthrough in machine learning. Bill Joy, the leading researcher of Sun Microsystems says that this superhuman artificial intelligence will bring about such exponential technological development that will practically end the era of humanity (this is the so called technological singularity)

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major role. This would be a huge step forward also because the global energy consumption is likely to be the double of the current by the middle of the century. As far as mining is concerned, the raw material appetite will probably grow along the population growth, says the forecast of the World Economic Forum on the mining industry in 2050: this means a demand of 50 billion tons by 2050 if calculated with the current 4-4.5 tons/person/ year global demand. There are researches and recommendations concerning sustainable mining.

A primary aspect in mining is environmental protection and repair or remediation of environmental damage, increasing the intensity and efficiency of extraction, and improving the recycling of raw materials.

SPACE TECHNOLOGY

Most of the working processes can already be automated, and even more will be in the future. According to the pessimistic forecast of Roshe Vardi, Professor of Rice University, this can lead to an unemployment rate of as high as fifty per cent. Even more probably, due to these changes, work, income generation and the social benefit system will transform substantially, and it’s sure, that people in 2050 will do jobs that currently don’t even exist.

Another aspect is that by 2050 robots will most probably be capable of expressing emotions, what is more, they will have their own feelings, will be able to have meaningful conversations with us, and even emotional relationships will possibly occur between humans and robots, which raises several moral and other questions. David Levy, international chess master, who is engaged in researches about artificial intelligence in relation to chess, wrote a book titled ‘Love and Sex with Robots’.

By 2050 3D printers will be present in our homes. 3D printing, with the help of which threedimensional objects can be printed using digital models, has been available since the 1980s. Its main application area is prototype printing, but with the advancement of the technology (that has had an exponential trend in recent years)

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huge perspectives will open up for applying it in the industry, medicine or education. The possibilities offered by 3D printing are practically endless: we can make any dish with it (this technology is available today!), we can reuse our old clothes by printing new ones from them, but its industrial utilisation is also diverse. 3D printing can totally transform mechanical engineering (even airplanes will be printable)..

RESOURCES According to a WWF study on renewable energy sources, if we invest enough in developing and installing renewable energy sources, almost all of our energy consumption can be supplied from renewable sources – and the greenhouse gas emission of the energy sector can be decreased by 80%.

But for this serious effort would be required and preparations should be started right away. Especially because this would not use irrationally huge resources, two per cent of the global GDP would be sufficient and development could be done with technologies currently available. The largest ‘energy suppliers’ would be the Sun and the wind, other important energy sources moving to the fore would be the oceans (wave energy), biomass, geothermic energy and hydro power plants would also play a

By 2050 we will be able to cover most of our resource demand from space. Currently researches are conducted into how raw materials can be extracted from asteroids or the Moon. The area can substantially develop in the future (some authors compare the significance of the future of space resource exploitation to that of the great geographical discoveries, or they even dub the possibilities as the space ‘gold rush’). NASA researchers consider that by 2050 it is realistic to build a settlement on the Moon, the purpose of which will be to launch the mass extraction of the Moon’s mineral resources and to extend the opportunities of space tourism common by then. Strategic planning at NASA extends until 2100.

“By 2050 we will be able to cover most of our resource demand from space.”

What concerns space travel, NASA currently focuses on the Earth-Moon relation, but it is hoped that by 2050 there will be at least one opportunity to send a human to Mars. Other experts go even farther, in their opinion by that time there will be human settlements on Mars. Beside government aspirations, private enterprises become more represented in space industry. SpaceX led by Elon Musk plans Mars trips for the 2020s and has set the goal

of establishing a Mars colony. Amazon also starts engaging in the 21st century ‘space competition’ that can present genuinely new perspectives in the long run.

TRANSPORT Car transport will be far safer, simpler and cleaner in 2050: the advancement of self-driving cars is not a novelty today; experts say that by 2035 we will travel exclusively by such vehicles. Self-driving cars are safer, because accidents that happen due to distraction can fully be avoided. Just in the United States there will be by 4.95 million less accidents and by 30 thousand less deaths and the time spent commuting will decrease by 4.8 billion hours. The reduction in the number of accidents, fuel costs and production loss will result in saving 500 billion dollars per year, says the Milken Institute in its study.

Electric cars will also become common by 2050, which will mean a 30% reduction of road carbon dioxide emission; with the wider spread of the technology the petroleum consumption will also be substantially reduced. With the development of the technology, there are five factors that contribute to the major improvement of the electric cars’ situation: production costs of batteries will drastically decrease (already by 2022 they will be real competitors of traditional cars as far as the full life cycle is concerned); their range will become much longer at an affordable price; electric recharging stations will spread; the car industry itself will invest considerable resources into electric car production, more and more models and types will appear; there will be a global pressure on car manufacturers to reduce pollutant emission and to ease the dependence on petroleum, writes Roland Hwang, Director of the Energy and Transport Programme at the Natural Resources Defence Council in the US. There were numerous attempts in the near past to develop high-speed rail; solutions will most probably be found by 2050. One of the most promising plans is the Hyperloop announced by Elon Musk, which in his formulation would mean a new transport method, but its structure will be similar to that of railway lines. The concept is about an evacuated pipe system, where people can travel in capsules with a speed of more than 1,000 km/hour. The prototype was planned to be built between San

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Francisco and Los Angeles, but the project is halted by high costs and other uncertainty factors, and it is little known what phase it is in. However, with appropriate financing, the idea could be implemented within a few years.

Many experts forecast the future ‘renaissance’ of railways, because environment-friendly transport forms are moving to the fore and railways can transport large numbers of passengers relatively fast without pollutant emission. The vision of 2050

by ARUP engineering consulting firm says that significant railway developments can be expected mainly in the developing, quickly urbanising Asian/ African regions in the following decades.

COMMUNICATION / MASS MEDIA Harish Shah, Singaporean futures researcher thinks that in 2050 computers in their present form will be no longer needed, instead of the monitor and the mouse we will have a foldable, flexible, pocket size device that will not require power source because it will be charged by body heat. It will receive voice commands and we will be able to control all our other devices (from our self-driving car to any smart device) with it. Its ‘screen’ will be projectable to anywhere, but also we will be able to ‘see’ it directly through our eyes as augmented virtual reality. There will be a comprehensive social network through which we will be able to communicate with anyone in the world in a much simpler way than today (we will not have to remember any passwords or user identifiers). In certain cases, if voice commands

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would be disturbing, there will be an option to control our devices by thoughts, with the help of socalled neuroimaging. However futuristic this may sound, this technology already exists.

Jonathon Porritt environmentalist (author of the book The World We Made) forecasts that the Internet will reach every corner of the Earth: by 2050 8 billion people, 97.5% of the population then will have access to the internet. At present 40% of the population has internet access and 68% of users are from developed countries, 32% from emerging countries. This means around 2.85 billion people.

The MIT centre dealing with collective intelligence sees the online expansion as one of the greatest innovations of modern history: it opens up innumerable possibilities for humankind and creates a certain collective consciousness (but to a much larger and developed extent than today).

Internet will affect traditional media products more directly. Since 2010, it was in 2015 when the number of printed magazine copies dropped most dramatically, and at the same time digital publishing shows an increase. According to Bradley Wilson, Professor of Midwestern State University, if the drop in printed paper copy numbers continues the current trend, by 2050 the whole sector may disappear.

With the advancement of translation technologies, language barriers will diminish: by 2050 automatic simultaneous interpretation will become default

TECHNOLOGY DOESN’T SOLVE EVERYTHING Although numerous positive developments can be expected, certain processes, like global climate change, present a worrying outlook.

The consequences will aggravate by 2050 and it is a question whether technological achievements will offer solutions: – hundreds of millions of people will probably be displaced; – Dengue fever and malaria may spread and cause casualties even in the USA because of hotter and more humid summers; – significantly bigger territories will be burned by wildfires (eight times as much land by 2100 as in 2010); – additional 8% of the world’s population will experience water scarcity; – hurricanes will cause 10-20% more intensive destruction than today; – millions will be affected by sea level rise in coastal cities; – wheat and maize yields will be threatened; – wildlife of reefs and several islands will be endangered; – territories suffering from droughts will face greater risks; – 63% of wine regions will be at risk.

all over the world. We will be able to speak a foreign language with the help of special glasses and a mobile application (the text appears on the glasses like subtitles) or other devices. These technologies are present already in test versions; by 2050 they will be perfected.

In the context of expanding opportunities provided by information technology, the internet and by the spread of artificial intelligence, virtual and augmented reality will permeate our everyday life and drastically transform our habits. Among others, it will make it possible to do the shopping without actually leaving home, shopping will be done virtually. We will select goods virtually (we can even try on clothes), service is done by artificial intelligence instead of real shop assistants, delivery will be done by drones, as Engineering UK describes a possible future vision in its report about the research on ‘The Future of Shopping’.

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RICARDO HAUSMANN: THE GROWTH AND DIFFUSION OF KNOWHOW Author: László Gere

Internationally renowned macro-economist, Ricardo Hausmann spoke about the growth and diffusion of knowledge capital in his keynote speech Growth and Diffusion of Knowhow at the annual conference of the Regional Studies Association in Dublin in 2017. The audience could learn about the recipe for economic growth and what it has to do with monkeys jumping on the trees.

Planning of Venezuela and as a member of the Board of the Central Bank of Venezuela. Between 1994 and 2000, he worked as Chief Economist at the Inter-American Development Bank, where he created the Research Department. In addition, he was Chair of the IMF-World Bank Development Committee. At present, Hausmann is director of the Center for International Development (CID) at Harvard University and Professor of the Practice of Economic Development at the Harvard Kennedy School of Government.

Ricardo Hausmann He is an economist of Venezuelan origins, born in 1956. His research primarily includes theories of economic growth, issues of macro-economic stability, international finance, structural transformation, macro-economic volatility, gender differences, coordination of financial aids and social dimensions of development. He holds a PhD in economics from Cornell University. He was a Professor of Economics at the Instituto de Estudios Superiores de Administracion (IESA) in Caracas, Venezuela between 1985-1991, where he also established the Center for Public Policy.

From 1992 to 1993, he served as Minister of

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As director of the Center for International Development, his area of research focusses on solving global challenges with breakthrough research on economic growth, institutional capability and policy design. He pays special attention to how regions and countries can accelerate growth. He leads CID’s Growth Lab where he works on theories of growth and structural transformation, developing practical tools to apply these theories and use them in selected country studies.

He has advised governments in over 40 developing countries on creating effective growth strategies and development policies – sometimes directly and at other times through major multilateral

banks (such as the International Monetary Fund and the World Bank), as well as regional development banks (that focus on Latin America, Africa, Asia and Eastern Europe).

His academic work has been published in leading journals (Science, the Journal of Development Economics, the Journal of International Economics, Proceedings of the National Academy of Sciences, the Journal of International Money and Finance, Economic Policy and the Journal of Economic Growth) as well as in other media outlets such as The New York Times, The Financial Times, The Economist, The Wall Street Journal, The Washington Post, and Forbes Magazine.

Regional Studies Association Annual Conference, Dublin, 2017 Hausmann spoke about the growth and diffusion of knowledge capital in his keynote speech Growth and Diffusion of Knowhow at the annual conference of the Regional Studies Association in Dublin in 2017.

For several decades, Hausmann’s research has been focusing on modelling the development of the world economy, describing the economic The Regional Studies Association was founded 52 years ago (in 1955), and it welcomed more than 600 participants from nearly 50 countries of the world (four-fifth of the participants came from the Member countries of the European Union) at its annual conference in 2017. During the four-day long event, some 472 papers were presented over 150 workshop sessions.

characteristics of specific countries and predicting their development paths. Within the framework of a research launched in 2006, he and his research team primarily considered export data to identify macro-trends; these were arranged into a matrix, using the results of network research, and eventually published with César Hidalgo in their study The Atlas of Economic Complexity.

“In our modern world, it is not only prosperity that has increased but also the income differences between countries have done so.”

In the preface to the Atlas of Economic Complexity, the authors start with thoughts similar to the ones presented in Hausmann’s keynote speech.

Over the past two centuries, mankind has undergone tremendous development, we accomplished significant results, such as our conquest of the skies and the moon. Our lives have been made easier by a large number of more modest, yet crucially important innovations, continuously contributing to the increase of our general prosperity. These feats transforming our lives include electric bulbs, telephones, cars, personal computers, antibiotics, TVs, refrigerators, water heaters and a range of other gadgets. We live in a world of such innovations that benefit us despite our minimal awareness of them, such as advances in electric power distribution, agrochemicals and water purification. This progress was possible because, among others, our productivity has grown significantly. This was not, however, accomplished individually: as individuals, we are not much more capable than our ancestors. But collectively, as societies, we can achieve much greater results.

In our modern world, it is not only prosperity that has increased but also the income differences between countries have done so. As far as Hausmann can see, it is productivity that accounts for income gaps. And productivity is primarily influenced by existing knowledge. Our tools are not different,

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and are available for anyone in today’s interconnected world. Difference lies in knowledge and knowhow. Embedding knowledge is not as simple as, for instance, the replacement of tools, it is a time- and resource-intensive task; and the quality of knowhow, and the specialised knowledge that different countries hold, that is, their degree of specialisation, have an increasing role in enhancing the economic output. Our most prosperous modern societies are wiser, not because their citizens are individually brilliant, but because these societies hold a diversity of knowhow and because they are able to recombine it to create a larger variety of smarter and better products. For example, several

The social accumulation of productive knowledge has not been a universal phenomenon. It has taken place in some parts of the world, but not in others. Where it has happened, it has underpinned an incredible increase in living standards.

Where it has not, living standards resemble those of centuries past. The enormous income gaps between rich and poor nations are an expression of the vast differences in productive knowledge amassed by different nations. These differences are expressed in the diversity and sophistication of the things that each of them makes.

teams are involved in constructing an aeroplane, and they can carry out only particular stages of the whole process, but their knowledge sums up (and the sum of the parts does make an aeroplane).

knowledge they hold, so do products. The amount of knowledge that is required to make a product can vary enormously. Most modern products require more knowledge than what a single person

Just as nations differ in the amount of productive

Japan Switzerland Germany South Korea Austria Sweden Czech Republic Hungary Singapore United States Finland United Kingdom Slovakia Slovenia Ireland Italy France Poland Belgium Israel

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can hold. Nobody in this world knows how to make a computer down to the last detail; it requires the combination of many different fields. That is why firms in a rich country are much more connected to other firms than firms in poor countries. For a society to operate at a high level of total productive knowledge, individuals must know different things. Diversity of productive knowledge, however, is not enough. In order to put knowledge into productive use, societies need to reassemble these distributed bits through teams, organizations and markets.

Accumulating productive knowledge is difficult.

For the most part, it is not available in books or on the Internet. It is embedded in brains and human networks. It is hard to acquire; it comes from years of experience. Productive knowledge requires structural changes. Hausmann compares it to learning a language: just as learning a new language requires changes in the structure of the brain and our mindset, so too developing a new industry requires changes in the patterns of interaction inside an organization or society.

In respect of economic growth, he calls attention to an important notion, the so-called “product space”. Product space is a term that is used to

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describe the network of relatedness between products. Relatedness is associated with the similarity in the inputs required by a certain activity including everything from particular skills, institutional and infrastructural requirements to technological similarity and the like. He cites an example from two relatively successful countries, Malaysia and Chile. Malaysia exports microwave ovens and Chile exports salmon. Salmon is a farm animal. It requires a lot of knowledge of biology and animal health. A microwave oven is

“In respect of economic growth, he calls attention to an important notion, the so-called “product space”. Product space is a term that is used to describe the network of relatedness between products.”

a technological product, an electronic product.

It’s difficult to say which one is more advanced or sophisticated, which one will lead to greater economic advancements. But, the central point that he is making is that if for some reason the microwave oven market got into trouble or if the country simply wanted to advance to other product lines, it is relatively easy to redeploy the capabilities from microwave ovens into many other electronic products, while it is much more difficult to redeploy the capabilities utilized in salmon farming to many other products. It is not impossible, but it is much more difficult because there are fewer closely related product lines. It is a metaphor of how this process of moving from one product to another product works in the real world.

would not really matter onto which tree the monkeys jump in this forest because every leap would require the same effort. But if this forest is irregular, with dense patches of trees in some

Hausmann gives another example: let us think of each product as a tree in the forest. Trees are similar and they are at a certain distance from each other. Now think of countries (or firms even) as monkeys living on the tree. In order for monkeys (countries) to progress, they have to move from poorer trees to richer, more fruitful trees, and they do so by jumping to nearby trees. If we are in a forest with all trees five yards apart, it

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parts and barren patches in others, then a country that is poorly placed in the forest will have trouble moving ahead economically, it requires much more energy to jump from one tree to the other. This is where the salmon and microwave oven cases serve as illustrative examples.

In his speech, Hasumann also emphasises the importance of what kind of product we produce and how many other countries are able to produce it.

The graphs made from data lines demonstrate that rich countries share the feature of producing a lot of products that are produced in a small number of countries; by contrast, the poor countries have the common feature not to produce a lot of products in total, and these products are also produced in many other countries.

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Another example is used by the professor to illustrate this. Producing products is like a game of scrabble. In scrabble, values are designated to single letters, based on their rarity. More frequently occurring and more easily used letters have less value, while rare and less easily used letters have higher values. Production possibilities exponentially increase in proportion with the size of the existing set of letters. The same analogy applies to products: products that are more easily produced, exported by many or occur in high volumes (such as raw materials) represent a lower value, while special, complex products with high added value and produced by few have greater value.

“In his closing remarks, Hausmann asks the question again: what influences growth? In his answer, he mentions two factors: one is the accumulation of knowledge, i.e. knowhow.

The other is the proximity of production techniques in products space, i.e. how related the products a country produces are.

If a country has proper, diversified knowledge, and its product mix is adequately related and transferable, the economic growth of the country is wellestablished, based on these two factors.�

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CURATING A DIGITAL REPOSITORY WITH THE EDITOR OF WIRED MAGAZINE Author: László Gere

On the occasion of PAGEO Club’s March 10, 2016 event, the chief editor of WIRED magazine's British edition spoke about the kind of future we must prepare for, as well as the most important traits we need to posses when thinking about the future, so that we may successfully orient ourselves in our world that is becoming ever faster. Summarizing his dynamic talk, he claimed that the future cannot be rejected, we must count on change and be able to live with it, even if a large portion of it seems incomprehensible to us.

David Rowan is Editor-at-large of WIRED magazine’s, the world's number one technology magazine, UK edition. Under his leadership, WIRED has broken out of traditional publication's constraints and it has been complemented with an ecosystem of conferences and applications, and what's more, with several consulting threads. David Rowan gets invited to personal consultation from London to Shenzhen, China. He is in touch with the most innovative people on an everyday basis, such as the founders of WhatsApp, LinkedIn, BuzzFeed, Spotify and Nest. David is a firm believer that our future is not inscrutable: although the Internet, big data, 3D printing and mobile phones provide inconceivably large opportunities and tremendous risks for us, these can all be analyzed. Technology forces all branches of the industry to continuous renewal.

Owing to this pattern, our social and consumption habits are transformed as well. What kind of effects do these technology-led social changes have on us and our place in the world?

In addition to WIRED, David also edits GQ's column "Digital Life", and writes under the pseudonym "Tech Traveller" for Condé Nast's business magazine. In the past, he served as the editor of The Guardian, but he also conquered the columns on The Sunday Times,

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The Observer, The Telegraph, and Time Magazine.

His influence and professional expertise are underscored by the fact that the British government commissioned David from among tech opinion leaders to act as the curator of the exhibition "British Creative Talent". In his talk, David Rowan spoke about we may form a mental image of the future already in the present day. As WIRED magazine, where he acts as Editor-at-large writes primarily about research institutes that themselves pursue future-oriented research, he shared a few thoughts with the audience about these experiences. First of all, it is vital that we do not regard the future as technological development, but using a different approach: things will become accessible to us that will help us develop our personalities, simplify carrying out our tasks, and connecting us to people who matter to us. Rowan believes that things spread ever quicker and it is this quickened pace that we are increasingly unable to keep up. As an example, he mentioned drones which 10 years ago we regarded as some kind of military weapon (assuming we heard of drones), today anyone can access them, or even own a drone. Amazon is developing its courier drones ever more dynamically, and individual firms attempt to realize self-driving vehicles as an application field for drones. It is nearly incredible what a fast journey the development

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of self-driving vehicles have traveled from idea to implementation. Robotics is also developing at an astonishing speed.

Normally a bit of time has to pass before new innovations become widely accessible. The Apple II computer is an excellent example, as are the spread of Internet browsers, which took at least 4-5 years from the first experimental phase to commercialization. This period is getting shorter. Today, in the age of the Internet a good idea can spread more easily and speedily than ever before.

DAVID ROWAN SUMMARIZED IN 10 POINTS THE CHANGES WE MUST COUNT ON IN THE FUTURE 1. The world will never move as slowly as again, it will only change faster. From the age of linear changes we enter into an age of exponential changes. (For instance, processors with a unit performance are becoming cheaper; DNA-sequencing is becoming cheaper, and in both cases, the price drop is exponential). This speed may even be dangerous if we are not aware of it - and if we wish to run a successful business.

2. The world of marketing is transformed: the role of users grows when "advertising" products, or artificial intelligence plays an increasingly significant

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role. Artificially created "individuals" send us offers tailored to our personal needs on the basis of our browsing (or online purchasing) history, or ever more companies "employ" artificial intelligence to run their customer service (via chat programs).

3. It becomes ever more difficult to maintain a separation between online and offline worlds. Owing to the widespread use of "smart" products our everyday lives become converted into data. "The Internet of things" is only in a beta phase today, but soon billions of sensors will surround us sending data to the network.

4. Every business will employ artificial intelligence.

With artificial intelligence, it becomes possible to execute simulations at a minimal cost that had never before been possible (eg. in city control, traffic control).

5. Today we must think in networks and not in hierarchies. The opinion and agreement of the "crowd" counts, crowdsourcing projects based on community contributions flourish, or sharing economy (today for instance Airbnb accommodates a lot more guests than the Hilton hotel chain, and this without having to change as much as a single bedsheet.)

6. New companies emerge out of nothing wherever we look. New market players appear who can significantly reshape our view about individual industry branches.

7. Design triumphs, everything becomes ever simpler.

Those companies survive that satisfy real human demands at the simplest way possible. (For instance, Uber works in a completely automatized way at the most convenient way possible for the customer instead of circumstantial taxicab trips.) This is not only true for companies, there are forward thinking examples of e-governance as well (for instance, there was an effort to make the online public administration portal of the United Kingdom as user friendly as possible and this approach has become fairly popular.)

8. In the future, we will not be using our devices via keyboards, and not through Google glass, but rather through an interface that does not yet exist today.

The development of virtual reality is one of the most important innovations today.

9. Security becomes an ever more pressing concern.

Everything can be hacked, there are news of hacker attacks every day.

10. The startup company approach will triumph in the future. Companies must be capable of trying something new, failing, and then trying again. Several large companies reorganize their operations, for instance GE operates ever more like a startup company, it is open to new ideas, and if a new innovation comes rushing in the door that seems useful then it is realized. The companies are ever more open to the public telling them what innovation would be attractive to them and they realize the most popular ideas.

The presenter summarized his talk by asking us to be prepared, as a new device that will change our way of thinking about the future is sure to arrive, as the iPhone did in 2007. In order to understand the future, it is important to recognize what this new device can change, and we should not judge it on the basis of its physical appearance (or even reject it, as did Steve Ballmer, the ex CEO of Microsoft, for instance, with the iPhone when it came out).

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PAIGEOMOMENTS

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PALLAS ATHENE GEOPOLITICAL DOCTRINES Presented by Norbert Csizmadia, President of Board of Pallas Athene Geopolitical and Innovation Foundation at the EUOBOR event on 22 nd May, 2017

If we wish to draw and present our own 21st-century map, the map of PAGEO, we end up with the following map, which has four main compass directions and pillars, with four main focuses and areas:

North of Thessaloniki, you can find a mountain called Paggaio. This mountain was the most widelyknown and most notable, most significant gold deposit of ancient Greece. In the times of Pallas Athene and Zeus, gold had a very important connotation, as a means of creating value. What is the symbolic significance of gold, or value, today? It is knowledge, creativity, talent, people-to-people connections and technology. Pallas Athene is the goddess of wisdom, knowledge and law for ancient Greeks. She is the child of Zeus and Metis, the goddess of goddess of crafty thought and wisdom, but she was considered as Zeus’s daughter, as she was born from his father’s forehead. She inherited her

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wit from her mother, and her strength from his father. The goddess was known as the patron of warriors seeking the truth. She supported several heroes, such as Perseus, Heracles or Odysseus, but she did not like any unnecessary bloodshed. She is a warrior goddess; the most frequently mentioned epithets highlighting her relationship to war include invincible, saviour of the people. Her presence in battles is rather protective, encouraging, disciplining; she is leading the people. Not only several significant inventions but also various skills are associated to the name of the goddess. In addition, Pallas Athene was the goddess of protectors of various cities, handicraft and wisdom.

• Pallas Athene Geopolitical Research Institute, a small, think tank-type research institute with a focus on Asia; • Related to education, promoting training in geopolitics, geo-economy and economic geography on university and PhD-levels; • Inviting the leading global geostrategic thinkers of the world to Hungary, and supporting Hungarian economic geographical and geo-economic workshops, institutes and researchers; • Publishing products, publications, books in such a Hungarian and international network which forms a bridge between the Far East and Hungary as well as Central-Eastern Europe. The major central element of our map is how we can become the European knowledge and intellectual hub of the 21st-century New Silk Road and the Asian century.

What kind of long-term strategy and vision connect the two regions (East Asia and Central Europe), and what role does PAGEO play in that?

PAiGEO FOUNDATION – GOALS, OPERATION A Pallas Athene Geopolitical Foundation was established by the Central Bank of Hungary in 2014 with the aim of encouraging the creation of geopolitical knowledge, which can promote the economic development of both Hungary and the Central-Eastern European region. Globalisation, which has accelerated by the 21st century, and its consequence, a global economic crisis affecting the whole world at the beginning of the century and the shifting economic world order increase the significance of the geopolitical discipline in terms of economic policies. Pallas Athene Innovation and Geopolitical Foundation can effectively contribute with creating knowledge, analyses, establishing international and scientific partnerships, stimulating the activity of the Hungarian geopolitical scene and channelling international achievements, while also applying these results in the core activities of the Central Bank.

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PAGEO RESEARCH INSTITUTE – CENTRAL-EASTERN STRATEGIC THINK TAN K In those two and a half years that have elapsed since the foundation of Pallas Athene Geopolitical Foundation, we created our Geopolitical Research Institute, the experts of which have produced over 384 researches, interviews, book reviews, scholarly articles and reports. The studies of our research institute are published on our website, www.geopolitika.hu, which have been visited by fifty thousand readers from 93 countries in the first six months of its operation. We launched our English site in March, 2017, on which all of our papers are published also in English for our international partners.

PAGEO RESEARCH INSTITUTE: FOCUS ON 6 COUNTRIES OF 1 REGION If we want to learn about the future, we need to turn towards the East; not accidentally, the 21st century is going to be the Asian Century. Recognising the growing potential underlying in the East Asian region, the Research Institute of PAGEO focusses in six countries in Asia: China and Hong Kong, Japan, South Korea, India, Singapore, and Indonesia. This is the region that have transformed most successfully in the past decade, and accounted for 87 per cent of Asia’s GDP and 78 per cent of its population in 2010. Our researchers have specialized in the countries in focus, and they all can speak perfectly the language of the particular country. In addition,

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we seek to enhance the professional knowledge base of the Research Institute with the work of Hungarian and regional external collaborators and the knowledge of fellow researchers whom we can host within the framework of the “visiting fellow programme”.

Our aim is to create one of the best research institute of Eastern Europe, with a focus on Asia, and put ourselves on the map of the best and most innovative e research institutes of the world.

In May, 2017, within the framework of EUOBOR (European One Belt One Road) initiative, our research institute was granted the “Euro-Sino Economic Research Award”, which means the best European research institute on China and the Silk Road, and we are proud of the close relationship established, and the fact that we are the first one to be consulted from China on issues related to the region.

GEOLECTURES: NEW GEOSTRATEGIC GENERATIONS It is one of the most important tasks of PAGEO to facilitate education, especially to professionally support the education of geopolitics, geo-economics and economic geography. In this framework, we established our own institute, our Geo-Centre, at Hungary’s most prestigious university of economics, the Corvinus University of Budapest, where we launched our Master’s as well as our PhD programme

as an interdisciplinary meeting point of economic geography, future studies, sustainable development and within the Faculty of Social Sciences. Students of the Faculty of Social Sciences majoring in International Relations can specialise in Geoeconomy both in Hungarian and English. Professionally, we take part in and coordinate the largest PhD programme in Central-Eastern Europe called Geopolitics and Political Geography from a geoeconomic Aspect, in which over a hundred students participate, and many of them choose the opportunities to connect and the future challenges related to Hungary and the New Silk Road as the topic of their dissertation.

Recently, we have invited such significant global geostrategic thinkers to Budapest who gave public lectures as part of the Geolectures series, including New York-based cultural anthropologist Arjun Apparudai, and Parag Khanna, a geoeconomic thinker living in Singapore, who is one of the 100 Top Global Thinkers of the world. In the Geocentre of Corvinus University and within the framework of the doctoral programme, exciting, thought-provoking presentations were delivered by Bruno Giussani, Director of TED Europe on knowledge sharing,

by Zhang Lihua, professor at the Department of

International Relations at Tsinghua University on the significance of One Belt, One Road; and by Didier Sornette, Professor at ETH Zurich on the predictability of the future, each attracting audiences of several hundreds of people, In our event called Pageo Klub invited lecturers– all of them are considered as significant global thinkers–gave presentations on the topics of their researches and their most important results. What they have in common is that they all seek solutions to the most important challenges affecting millions of people; their presentations as well as live broadcast sessions provided thousands of professionals with the opportunity to be part of an exchange of experience Our invited lecturers included American John Gerzema; world-famous, Hungarian-born physicist Albert László Barabási, a professor and researcher who worked at MIT in Boston as well, engaged in the world of networks; Mihály Csíkszentmihályi, again, a world-famous researcher of flow and creativity; Sandy Speicher partner at the IDEO Factory LAB at Stanford University, where she also serves as managing director of the education practice;

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Leonard Brody, a Canadian start-up daredevil of Hungarian origins; and Noah Raford, futurist from the United Arab Emirates. The most prominent thinker of geopolitics, George Friedman–who is also of Hungarian origins–held his book launch, and the Hungarian edition of his books was sponsored by PAGEO. Simon Anholt gave a presentation on the role of good places, and David Rowan, the Editor-in-Chief of WIRED magazine delivered one on the new technological world order.

Budapest Brain Bar knowledge festival, which has been sponsored also by Google and WIRED this year, recognizing the novelty and international success of the event, which has become Europe’s most significant festival on the future. In the last two years, we have invited more than thirty international, world-renowned experts to Budapest.

Within the framework of these programmes, a lecture was delivered by world-renowned economic historian and author, Niall Fergusson, Philip Zimbardo, a professor emeritus at Stanford University, Richard Florida, a professor at Toronto University, who gave a presentation on the rise of creative cities and the creative class, or Indian-born Sugata Mitra, engaged in education and innovation.

The experts shaping trends in geopolitics, technology and sciences delivered presentations in front of twenty thousand people in total at various events in Budapest, organized with the sponsorship of PAGEO. These events provide the opportunities for such encounters that stimulate international relations and inspire scientific collaboration. These events have significantly contributed to making Budapest the scientific, technological and creativity centre of the region.

BUDAPEST STRATEGIC HUB: SUPPORTING HUNGARIAN GEOPOLITICAL WORKSHOPS, INSTITUTES AS WELL AS INTERNATIONAL PROGRAMMES Over the past two years, we have supported more than three hundred initiatives of a worth of over two million euros, which could act as the driver of the geopolitical scientific life in Hungary and of such events that have put Budapest in the global map.

With the help of our aid, several Hungarian researchers could participate in international conferences and give presentations, and Hungarian research institutes, scientific workshops and centres could organize joint international professional programmes and conferences.

We sponsored such events as annually organized TEDxDanubia, which invites the most inspiring thinkers to Budapest. We were the main sponsors of EUGEO, Europe’s most significant congress on geography, held in Budapest in 2015; of WOMEX, a famous international event held in Central-Eastern Europe for the first time in its history; and of

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BOOKS AND PUBLICATIONS – HUG: HUNGARIAN GEOPOLITICS Since January, 2015 we have sponsored the edition of 30 books in total, the topics of which can be related to various disciplines fitting the profile of the Foundation, ranging from geography to security policy, from geopolitics and geo-strategy to economics.

World-renowned geostrategist, George Friedman, earned the appreciation of the professional audience and leading decision-makers as the founder of Stratfor, with his bold conclusions and extraordinary perspective. In his work, The Next Decade, he examines whether the American empire is compatible with the republic. Which will be needed in the world of chaotic Islam, expanding Russia, gloomy Europe and vast China? In his best-selling book, The Next 100 Years, which provides a broader chronological outlook, he writes about the possible future transformation of our world with scientific accuracy, but with the props of fiction. His book, Flashpoints, is an exciting lesson on history, and also a frightening forecast on the social and political fractures of our continent and their impact on the rest of the world.

HUG: HUNGARIAN GEOPOLITICS HUG (Hungarian Geopolitics), the Hungarian and English magazine of the PAGEO Research Institute was launched in March, 2016. It is Hungary’s leading magazine on geopolitical and geostrategic topics.

The goal of the magazine is to present our rapidly changing world, the importance of the geopolitical approach, the effects on new technologies on our everyday life and the rise of Asia to interested readers to a high professional standard but in a readily comprehensible manner. Our authors include Hungarian and international experts, world-famous professors and the representatives of the new generation of researchers, who have all undertaken to collect and present the morsels of information that are dispersed in several places in the world but are parts of an integrated whole.

The first issue of HUG, published in the spring of 2016, examines the new geopolitical, geostrategic and geoeconomic trends of the 21st century, dwells on mapping our multipolar world order and pays special attention to distribute geopolitical thinking. The second issue of HUG examines the topics of discovering creativity, knowledge, technology and the transformation of education, and seeks the answer to the question as to what challenges future schools will have to face.

The third issue of HUG focusses on China’s ambitious vision of foreign policy, the New Silk Road. It describes the process how the ancient Silk Road came into being, and its relationship, from historic times up to these days, with the particularly important economic and infrastructure project of our age, the New Silk Road, in which Hungary can also be given an important role.

The fourth issue of HUG focusses on the transformation of technology, and on the nodes of the new global network, i.e. cities. It explores how infrastructure is transforming space, may it be the Trans-Siberian Railway or China’s high-speed rail transport. It examines how cities are becoming increasingly smart and how their significance in terms of world economy is growing, owing to the technological revolution. The fifth issue of HUG seeks answers to the future transformation of

the world, through the concepts of the world order by great thinkers and through scenarios and visions on the mid-century. The sixth issue is about the great change of era, exploring the interrelations between growth, knowledge and technology. The seventh issue is about the One Belt, One Road and 16+1 cooperation, and the eighth issue of HUG focusses of the Central-Eastern European region.

GEOFUSIONAL MAPS – NEW WORLD ORDER ON THE BRINK OF THE GREAT CHANGE OF ERA In addition to my work at PAGEO, my book, Geopillanat (Geofusion) was published in November, 2016, which compiles the professional results of the last five years in one single volume with a hundred interesting maps and infographics. The book is a special professional guidebook with the help of which we can discover the new world order of the 21st century and the world around us with the help of geography, drawing a new geopolitical and technological map of the era. I am particularly pleased about the fact that the book was voted as one of the top 25 most significant and best specialized books in Hungary in May, 2017. The book published in English entitled Geofusion in the autumn of 2017. In order to understand what is happening in the new multipolar global arena of the 21st century, we need to focus on four priorities. The first one means that we are witnessing the rise of geography, and we are living in a geoeconomic era aside from geopolitics, in the age of networks and fusions, where a new great change of era has begun with the help of technological advancements and fusional meeting points, in which the era and the places, therefore geography as such, have a prominent role. The task of 21st-century explorers and geostrategists is to give guidance on a world full of global economic and social challenges.

New maps are required, which incorporate the wisdom and the tools of the old ones, but are complemented by today’s knowledge. We can give an answer to the question as to how we can anticipate global processes on the basis of the latest interrelations between geography and economics.

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Authors: Ráhel Czirják, László Gere

On 22 nd May, 2017, the European Forum for Belt and Road Cooperation Conference was held by EUOBOR (European Institute for One Belt One Road Economic and Cultural Cooperation and Development) and Pallas Athene Geopolitical Foundation, where invited Hungarian and foreign lecturers presented the opportunities and challenges of the CEE-China cooperation. The event also reflected on the Belt and Road Summit, held in Beijing a week earlier, with special regard to issues relevant for Hungary and the CEE countries.

The conference was opened by Zhou Xinjian, Economic and Commercial Counsellor of the Chinese embassy to Hungary, who, reflecting upon the outcome of the summit, said that the event taking place participated by a total of 57 countries was extremely successful. So far, almost 100 countries, including Hungary among the first ones in Europe, have joined the Belt and Road initiative and 40 Memorandums of Agreement have been signed.

Zhou highlighted that although the initiative was launched in China, it benefits the entire world, as the continuously constructed economic corridors are creating new opportunities and open new development spaces for the participants, including the CEE region. Regrading Hungary, the China.

Hungary relations have never been more favourable throughout their history, he said, therefore it is important to take advantage of the opportunities arising from the good terms.

THE PROSPECTS OF THE EU-CHINA RELATIONS ON ONE BELT, ONE ROAD (SESSION ONE) In the first session, Hou Yongzhi, Director of the Department of Development Strategy

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and Regional Economic Studies, Dániel Palotai, Executive Director of the Central Bank of Hungary and Norbert Csizmadia, Chairman of the Board of Trustees of PAGEO delivered presentations. The discussion was moderated by Anton Bendarjevsky, Director of PAGEO. In his presentation, Hou Yongzhi said that the New Silk Road, i.e. the One Belt, One Road (OBOR) initiative, was launched by China’s head of state, Xi Jinping in 2013. Although there are many who have misgivings about the cooperation, facts are proving the Chinese right: over a hundred countries have signalled their intention to join, and almost 40 Memorandums of Understanding have been signed. In 2016, the value of trade between China and its partners amounted to some $9,500 billion.

The cooperation between Europe and China plays a prominent role within the New Silk Road, Hou highlighted, as the two regions exert considerable economic impact on each other. In 2015, for example, 73 per cent of all transfers in the world economy were made between these two parties. The effective cooperation of the parties may be facilitated by their different approaches,

“Almost 100 countries have joined the Belt and Road initiative...” as the traditional Chinese mindset puts emphasis on ethics, while the European mindset puts emphasis on technique, thus they can complete each other well. However, talking is not enough to achieve good results; the cooperation must be further enhanced.

Dániel Palotai primarily spoke about the financial aspects of One Belt, One Road. He explained that the role of Hungary on the New Silk Road is to connect the East with the West. The initiative means an enormous economic opportunity to our country, as Chinese companies intend to significantly increase their investments in the region, and the cooperation creates a good opportunity for the expansion of Hungarian companies in China. In addition to infrastructure investments, such as the development of the Budapest-Belgrade railway, Hungary wants to

extend the cooperation with China also in terms of finances, in which the Central Bank will assume a prominent role. The Chinese central bank has concluded several currency swap framework agreements with foreign central banks, including the Central Bank of Hungary in 2013. That is, the Central Bank of Hungary is also on the New Silk Road.

Norbert Csizmadia, Chairman of the of the Board of Trustees of Pallas Athene Geopolitical Foundation, mainly spoke about the role that the Foundation plays in the Chinese initiative.

PAGEO, with its focus on East Asia, wants to be a knowledge hub between China and Europe. In his presentation, he described the achievements of PAGEO’s Geopolitical Research Institute: among others, 384 studies and articles have been published in Hungarian and English, which have attracted almost 50, 000 readers from 93 countries; the Institute sponsors numerous Hungarian, European and global events, organises its own professional events, in relation to which twentyfour world-renowned geopolitical thinkers have been invited; and numerous books as well as the Hungarian Geopolitics (HUG) magazine have been published in Hungarian and English. The

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Land and sear routes of Belt and Road Initiative

Research Institute, thanks to the work that has been done so far, has become a member of the 16 + 1 Think Tanks Network consisting of CentralEastern European research institutes coordinated by the Chinese Academy of Social Sciences.

As a special event of the Conference, the EUOBOR Institute granted the PAGEO Research Institute the Euro-Sino Economic Research Award, as a recognition of its achievements in the research of economic relationships between China and Europe. The award was handed over by Zhou Xinjian and Li Zhen, President of the EUOBOR Institute.

AREAS AND CHALLENGES OF THE CEEC-CHINA COOPERATION (SESSION TWO) The lecturers of the second session of the Conference included Wang Yiwei, Director of the Centre for European Studies at Renmin University, Zhu Xiaozhong, Professor of the Chinese Academy of Social Sciences, Gergely Salát, head of the Department of Chinese Studies at Pázmány Péter Catholic University, and Dragana Mitrovic, Professor of Belgrade University.

In his presentation entitled Belt and Road initiative and the revival of civilisations, Wang Yiwei

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outlined the ancient Silk Road, and then he spoke about the global role and the economic opportunities of OBOR. He highlighted that China wants to share with other countries the experiences gained in industrialisation and the related economic upturn, which lifted millions of people out of poverty. This way, OBOR van exert a positive impact on the global economy.

In his speech, he emphasized the importance of the New Silk Road initiative in the development of transport links. “OBOR is about interconnectivity, he said; this is a transportation network stretching through Eurasia which is also the longest economic corridor across the globe.”

After the presentations given in a more or less optimistic tone, Gergely Salát spoke about the weak point of the initiative, namely the weakness of the Chinese cultural influence, and its root-causes. According to the university professor, OBOR does not have only infrastructure and economic elements, but also soft ones, such as education and culture. but China is less successful at promoting these in the Central-Eastern European region. This is illustrated by the fact that, according to surveys, the majority of the region’s population do not regard the rise of the Asian

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Rail network of Turkey

giant as a positive phenomenon. Among others, China’s negative perception can be contributed to biased European media, but also to historical events considered as unfavourable by the world, such as opium wars, the Boxer Rebellion or the Communist Party’s rise to power and the rise of the totalitarian dictatorship.

According to Salát, if China wants to strengthen its cultural relationships in the Central-Eastern European region, aside from maintaining government support, more space should be allowed for the players of the private sectors, who–due to their profit-oriented nature–sell various “cultural products” in a professional manner. In addition, it would be important to involve local players more actively, as they can have a better understanding of the existing demand in the region.

As a conclusion of the session, Dragana Mitrovic talked about the 16+1 initiative, that is that part of the New Silk Road that brings Central-Eastern European countries together. The participants laid down the viewpoints determining the fundamentals of the cooperation in Warsaw, in 2012.

The initiative was not–and has not been ever since–perceived unequivocally positively by the EU, as 11 of the 16 Central-Eastern European countries are EU Member States. But the community considers the cooperation with China as building a “Great Wall of China” within Europe.

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Along the 16 + 1 Cooperation, trade with China as well as the volume of investments have increased in recent years, but China’s economic ties are still much closer with Western European countries.

Furthermore, trade deficit has increased in the Central-Eastern European region? China exports much more to the region than it imports from here.

In this context, the question arises: can we really talk about a win-win situation? In the professor’s opinion, for the present we cannot. CentralEastern Europe would need more Chinese investments, tourists and export to strike a balance.

The partner states of the 16 + 1 Cooperation have to take an active role to realise these.

NEW OPPORTUNITIES OF THE CEEC-CHINA COOPERATION AFTER THE BEIJING SUMMIT (SESSION THREE) In the next part of the Conference, László György, Director of the Pallas Athene Domus Mentis Foundation, Zhao Dongwei, Director of the Department of Institutions of the People’s Bank of China, Altay Atli, Research Associate at the Istanbul Policy Center, and Ferenc Bánhidi, Professor at the Pázmány Péter Catholic University gave presentations. As a member of the Hungarian delegation, László György participated at the Beijing summit held a week earlier.

In his

Data flow in the world (2005, 2014)

presentation, he reflected upon and summarised the speech delivered by China’s head of state, Xi Jinping. This year’s Belt and Road Summit can be regarded as a milestone in the history of the initiative, because the Chinese head of state declared the initial phase of One Belt, One Road has ended. But what is this new Silk Road? It is a complex cooperation process: business, political and, at the same time, civilisation project.

with international standards, eliminating the misunderstandings and conflicts between countries. The Director also talked about their risk assessment methods, which are being increasingly developed in order to keep the risk level of various developments to a minimum.

In orderto successfully implement the initiative, China intends to act as a peacemaker in a region– Eurasia–where several wars were fought in the last decades, as the success of One Belt, One Road requires a peaceful, stable environment, this is China’s primary interest in the region. But it is an important aspect of the cooperation, László György highlighted, that China does not seek to promote only its own interests, but also listens to the countries having their own visons and recommendations, and is willing to align its activities to them.

In his presentation, Altay Alti, Research Associate at the Istanbul Policy Center examined OBOR from a Turkish perspective, seeking the answer to the question as to whether Turkey, often referred to as a bridge between the East and the West, can capitalise on its geographical location? The key to this is the development of transport infrastructure, since the country has considerable deficiencies in this respect. Therefore, Turkey primarily sees the One Belt, One Road initiative as a source of investments in transport infrastructure. This development of the country will have a positive effect also on international trade, as goods can get from Asia to Europe, and vice versa, through Turkey faster and cheaper than they do today.

Zhao Dongwei gave un update on the latest news and prospects of One Belt, One Road. Among others, he described how various bond market instruments promote the efficiency of the implementation of the project. These comply

The session was closed by Ferenc Bánhidi, speaking about the infocommunications aspects of OBOR. OBOR. The topic is a very relevant one, the Professor argued, as, on the one hand, globalisation is being digitised and, on the other

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As a result of the development, a double-track line would be constructed replacing the current singletrack one, allowing a speed of 160 km per h for passenger trains and 120 km per h for freight trains. The upgrading the line is an absolute necessity as it was last renovated in the 1960s, but the question of return on investment arises (in the currently relatively under-utilised section) due to extremely high costs, which is further aggravated by the fact that so far no preliminary impact assessment has been done on the project; furthermore, the European Committee has also launched an investigation into the development.

Implementation is only possible on condition that a positive decision is made by the Union.

hand, the development of infocommunications infrastructure forms an important part of the New Silk Road. To support his former argument, he showed a graphic illustration of the global increase of data flow. OBOR has strategic goals concerning infocommunications technology, such as promoting network interconnection among partner states, reducing the costs of network access, bridging the digital divide within and between countries, etc. It would be useful for Central-Eastern European countries to get familiar with such Chinese initiatives as the Made in China 2025 development strategy Central-Eastern European countries in order to take advantage of the opportunities offered by the cooperation, the Professor proposed.

PROJECTS AND PLANS ALONG ONE BELT, ONE ROAD(SESSION FOUR) After learning about the long-term effects, possibilities and challenges of OBOR, specific plans

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were introduced in the fourth session, through presenting the projects related to the New Silk Road and the activities and ideas of Chinese companies operating in Hungary.

Anett Szabó, Head of Communications at ChineseHungarian Railway Nonprofit Ltd., gave insights into the details of planning the Budapest-Belgrade railway and outlined the importance of the project for Hungary.

The line is connected to the One Belt, One Road initiative through Piraeus Port, the majority ownership was acquired by China Ocean Shipping Company, COSCO (the fourth largest container shipping company of the world) in April, 2016. The goods reaching the port would be transported farther on the mainland by railway, and the section between Budapest and Belgrade would form a part of this line. The budget of the project amounts to some HUF 472-550 billion, entirely financed by Chinese loans, on which the two countries have already concluded an inter-governmental treaty.

The second presentation was given by Mariann Gecse, Director for Government Relations and Communications at Huawei Hungary, during which she briefly introduced the company, China’s largest non-state, i.e., privately owned company, which is present in some 170 countries. The copany is ectremely significant for Hungary, as it is Hungary where Huawei has built its largest assembly and logistics centre outside China.

The company has three major business branches: development of network solutions (e.g. antennas), installing business solutions (servers, etc.), and maybe the most widely-known branch is the smartphone one. In Hungary, mostly the former two activities are pursued by Huawei; in addition, the company–primarily to retain its competitiveness–pays special attention to research, development and innovation. Finally, the presentation also covered the importance of Hungary as a deployment destination and the potential underlying in our advantageous geographical location.

In his presentation, this topic was continued and explained in more detail by Ernő Pető, President of ChinaCham Hungary, who, among others, spoke about why Hungary means a hub. On the one hand, our country is a market hub, sue to its well-functioning banking and financial system; for example, it is at the vanguard regarding renminbi financing. On the other hand, it takes a central place within Europe, its primary market consists of ten Central-eastern European countries, and its secondary market is constituted by Germany, France and the Benelux states, as well as Ukraine and Russia. Thus, a market of 500 million people can be reached relatively quickly through our country, and this is a considerable size even on a Chinese scale. Most probably, it is one of

the reasons why only two special economic zones have been established in Europe so far, and both of them can be found in Hungary. There are two more aspects that can make Hungary an attractive investment destination for Chinese companies: on the one hand, it is a Members State of the European Union, with all its advantages; on the other hand, wage levels are already below the Chinese ones in many cases.

“There are two more aspects that can make Hungary an attractive investment destination for Chinese companies: on the one hand, it is a Members State of the European Union, with all its advantages; on the other hand, wage levels are already below the Chinese ones in many cases.”

In his presentation, he also spoke about the fact that China is not only a manufacturer any more, but also a significant consumer market, thus not just Made in China but also Made for China are both relevant. In relation to the economic corridors, Pető underlined that maritime routes have always been and will be the most important routes, but railway can present an alternative in many cases, as it is faster. It is more expensive than shipping, but still cheaper than air transport.

Finally, the presentation highlighted the ambivalent situation of Central-Eastern European countries. On the one hand, they compete with each other; on the other hand, they are increasingly forced to cooperate with each other, as they would need to combine their production capacities to be able to produce goods in volumes sufficient for China.

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The New World Order Conference Author: Éva Szentirmai

The conference organized by PAGEO on 29 November coincided with the Chinese Premier’s visit to Budapest at the occasion of the 16+1 Summit. In parallel with this world event, the conference welcomed nearly 150 participants to answer the following questions: can we still speak about a unipolar world? Can we be in the forefront of a new bipolar world order with new participants, or can we see the emergence of a multipolar world order? Will the emerging countries accept the existing structures, or will it be necessary to reform the system entirely? The presenters sought the answer to these questions in their presentations.

ties of China and Central and Eastern Europe as well as their positive influences on our region. He compared the economic cooperation initiated with the 16 CEE countries to China’s Marshall Plan, which might strengthen the Central and Eastern European Region’s position within Europe. He stressed that China has sent an invitation to our region and it is only up to us whether we exploit this opportunity. Jones supposes it is essential that the youngsters get involved in the building of relations, and he highlighted the importance of knowing intercultural communication, which is the pledge of establishing good relations. Therefore, education and exchange programs are of key significance.

THE INTERNATIONAL INSTITUTIONS SESSION (moderated by Anton Bendarzsevszkij, Director of Pallas Athéné Geopolitical Foundation).

First Oleg Buklemisev (Associate Professor in the Department of Economics at Moscow State University) held his presentation entitled Multipolar or Fragmented World: An Economist's View. The speaker pointed out that the world has become fragmented rather than multipolar. The changes taking place are slow and circumstantial rather than fast and sustainable. The acceptance and significance of international institutions has largely decreased. In his opinion leadership problems are primarily caused by the lack of actual global leadership instead of the false steps, which are rather consequences.

Oleg Buklemisev

The conference consisted of three main sessions: the role of international institutions, the panel on China and the rise of Asia, as well as the role of the European Union in the changing world order.

Norbert Csizmadia

The event was opened by President of Pallas Athéné Geopolitical Foundation Norbert Csizmadia. In his opening speech, Csizmadia presented the significant results achieved by the Foundation so far and the commitments of PAGEO in the Sino-Euro scientific and economic relations. The speaker highlighted that we are at the dawn of a new geopolitical era, and the winners and losers of the new age will be determined in this geomoment. He raised important questions that extend the structure of the forthcoming new age and stated that in this new age it is connection points, connectivity and complexity that play the most important role. The structures of the new system are now taking shape in the form of smart cities, knowledge ports, HUBs and so on. Nevertheless, Csizmadia pointed out that the drawing of new outlines requires not only a good map and a compass but a good pen as well to redraw the picture of the emerging new world.

The 16+1 initiative offers a big dose of ink for this pen, which helped us organize this conference that we were waiting for with keen interest.

The first speaker, David A. Jones (Professor at the American Studies Center, University of Warsaw) held a keynote speech entitled Move Europe East: Seizing an Opportunity to Make Central and Eastern Europe’s Economic Wealth Equal or Surpass that of Western Europe, introducing China’s geopolitical and geo-economic strategies to the audience. In his presentation, the speaker emphasized the cooperation opportuni-

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David A. Jones

Su Changhe

Following this, Su Changhe (Executive Dean at the School of International Relations and Public Affairs of Fudan University) delivered his presentation entitled The Coming of a New Era of International Relations and its Theoretical Implications. The speaker discussed and analyzed the phenomena, problems and contradictions (e.g. open global economic system vs. protectionism) induced by globalization in the world, using 10 questions as a guideline, and he also studied the potential national and international responses to these questions. In our world order one of the key issues is that the gap between the rich and the poor is getting deeper rather than decreasing, and there is no global responsibility. The Professor mentioned mutual interests instead of universal interests.

The second presentation was Power projection in today’s international arena: the role of international organizations by Dávid Szabó (Director for Foreign Affairs at Századvég Foundation). The speaker emphasized the importance of international institutions, but he also highlighted the deficiencies of the institutions. He underlined the need of reforming the UNO. Following this, the presentation entitled New world order and Old Fashioned UN: Is it Sustainable? by Dusan Prorokovic (Director of the Center for Strategic Alternatives, Serbia) examined the changes of the previous decades that affect the current geopolitical situation. In his presentation the speaker pointed out that the changes in world politics are still determined by the great powers; however, the power relations are slowly being rearranged, and this is not reflected in the organizations of the UNO. Suggestions for solutions exist, but they violate fundamental American political interests. Everyone wants to find a solution, but the organization is still far from it.

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The New World Order Conference

build a community that is dedicated to the future of humanity and able to create an open, inclusive, clear and fair world that enjoys the fruits of lasting peace, entire safety and common growth. The BRI and the 16+1 Initiatives definitely support this theory.

Viktor Eszterhai

Oleg Buklemisev, Dávid Szabó, Dusan Prorokovic, Diána Szőke

The next speaker, Diána Szőke (Senior Analyst at the Institute of Foreign Affairs and Trade) started her presentation The World in 2035: A geopolitical forecast with an eloquent quotation made by Niels Bohr in 1922 (“Prediction is very difficult, especially if it’s about the future.”). This citation suggests how complex the present world political situation is. Nevertheless, we should be able to outline some kind of a potential prospect through analyses, along certain topics so that we can get ready for the challenges. In relation to this, “The World in 2035” project provides a forecast on the changes taking place in the world. Accordingly, the three most debated topics - with the most obscure future depicted - are populism, Russia and economic cooperation, as well as the “Black swan” events, considering which there is hardly any information but they might exert a significant effect on the world in the future. The final statement is that the research definitely shows a power shift towards Asia and confirms the emergence of a multipolar world order. In addition to that, the forecast is pessimistic about the political changes but optimistic about economic development.

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CHINA AND THE RISE OF ASIA SESSION (moderated by Tamás Baranyi, Leading Researcher of Antall József Knowledge Center)

Kong Tianping

The first speaker of the session was Kong Tianping (Senior Researcher of the Institute of European Studies at the Chinese Academy of Social Sciences) with his presentation China's role in changing international order. He provided useful indications about China’s peaceful rise and future role in the establishment of the new world order. According to the speaker, the Eastern Asian great power primarily aims to

The next presentation was What is the interest of the EU within the BRI? by Viktor Eszterhai (Deputy Director of Research and China Senior Analyst at Pallas Athéné Geopolitical Foundation). The world order led by the USA has provided a favorable environment for the USA for several decades. This presentation sought the answer to the question whether the Chinese alternative to the changing world order, the “One Belt, One Road” initiative offers cooperation opportunities to the EU. The current world order is definitely based upon the USA and the EU, which China would like to change in the long term. The Chinese ambitions are well served by the BRICS cooperation, which might considerably overshadow the Euro-Atlantic forcelines concerning both its economic weight and its population in the future. However, the BRI is most significant initiative for both parties in economic terms. At the same time, this cooperation also holds out a carrot with it, facilitating China’s further economic consolidation in the long term; however, the aim is still to erode the EU’s international importance.

Ágnes Szunomár

In her extremely topical presentation Belt & Road - Implications for the CEE region, Ágnes Szunomár (Research Fellow at Institute of World Economics, Head of the Research Group on Development Economics) provided information on the economic relations of the People’s Republic of China and Central and Eastern Europe, supporting the significance of the 16+1 Summit in Budapest. The region is highly important to China thanks to the considerable economic potential hidden in these countries, which the BRI and the 16+1 initiative take really seriously. It is a key region and an entry point for the spreading towards the western part of Europe, it has cheap and highly qualified workforce and it is less sensitive to political and economic issues than the western part of the continent. Similarly, the CEE Region deems cooperation with China as an opportunity in terms of investment, trading and diversification. Nevertheless, besides the benefits of cooperation, negative impacts such as the changes in the CEE-EU and the China-EU relations also come to the foreground. The former is overshadowed by disappointment and the latter by the status of human rights and Tibet.

Ramachandra Byrappa The last speaker of the section, Ramachandra Byrappa (Associate Professor at the Department of Modern and Recent History, Eötvös Loránd University) delivered a brief and concise presentation entitled Tango or tangle: Let us leave southernization to India. He discussed the special situation and future world political opportunities of China and India. He outlined the theory of the northern and southern system, with the natural sphere of interests arising from the geographical location of the two countries. Also, he specified the different ideological bases of the two countries.

THE ROLE OF THE EUROPEAN UNION IN THE CHANGING WORLD ORDER (moderated by László Vasa, Deputy Director for Operations at the Institute for Foreign Affairs and trade).

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The New World Order Conference

The first presentation What European foreign policy to address today's and tomorrow's geopolitical challenges? of the Section was delivered by David Criekemans (Associate Professor in International Relations at the University of Antwerp). According to the speaker, the foreign political processes related to the European Union influence the establishment of the common solution mechanisms for the community. The internal problems prevent the EU from taking significant roles in world politics. However, the new foreign political doctrine of the USA imposes serious challenges on Europe, although in certain cases the interests of the world powers have not coincided (e.g. Eurasia). The European Union did not recognize how serious geopolitical consequences the Ukrainian events might have against Russia. However, no decision has been passed on the way of settling the damaged relationship. China’s obvious rise needs the adaptation of the Balance of Power Policy from the EU, too.

Nevertheless, the provision of internal stability should be the primary purpose.

Márton Péti This hot topic was followed by István Perger’s (Deputy Head of Representation of the European Commis-

the respondents. It is also interesting to note that despite the disagreements with the European Union the image of the community is rather good than bad.

When assessing the functioning of the EU, women and men respondents did not differ significantly; however, women’s attitude to Europe was a little more positive. The questionnaire also touched upon the image of Asia and the future of the world.

The New World Order Conference was an exciting and hot geopolitical event with lively debates at the impressive and legendary venue of Gerbaud Confectionery.

Anton Bendarzsevszkij

sion in Hungary) presentation entitled The Future of Europe - Possible Scenarios. The need to solve the problems affecting the future of the EU are more and more pressing, since the political and economic situation of the world is continuously changing and the forecasts are rather negative for the EU. The presentation discussed the 5+1 potential scenarios outlined

by Juncker, as well as their positive and negative influences. The speaker also touched upon the schedule for passing the political decisions of the Union.

David Criekemans István Perger In his presentation Changing potentials of European development bringing cohesion and diversity Márton Péti (Head of Institute, Institute of Geostrategy at the University of Corvinus) analyzed the EU’s inner problems in depth. Owing to the economic crisis the significance of global politics has been pushed into the background since the early 2000s. The global economic role of the European Union is decreasing, while the weight of Asia is increasing. By 2050 the situation will have become even worse with respect to the USA and Europe. Unsolved, internal economic and cultural differences mean a considerable disadvantage. The different foreign economic orientation and the macro regional differences predict a difficult future.

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The last presentation of the conference was Attitudes and interests of Hungarian population towards global foreign policy, USA, EU and China by Anton Bendarzsevszkij (Director of Pallas Athéné Geopolitical Foundation). The speaker presented the findings of a representative questionnaire conducted by PAGEO on the current attitude and interests of the Hungarian population concerning the actors in world politics. The research reveals that TV still has the most significant information mediating role (58.6 %), nearly three times the online media (22.9 %). It turned out that in Hungary one of the least known European leader is Emmanuel Macron, while Vladimir Putin is the most influential politician according to

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GEOGRAPHY, ECONOMY, STRATEGY

GEO Institute at the Corvinus University of Budapest Authors: Géza Salamin, Márton Péti

How will special and urban development and planning become a tool of economic development? What space-shaping strategies are forming and dominating in Asia and Europe? How are the roles of different regions of the world being rearranged?

What aalternatives to current economic thinking exist, and what is an environmentally-friendly economy like? Such questions, often seeming still unusual at first, are addressed in both education and research by a workshop of the Corvinus University of Budapest, the Institute of Economic Geography, Geoeconomy and Sustainable Development, informally abbreviated as the GEO Institute, which has been reestablished recently but has considerable traditions owing to its predecessors.

In Volume 2016 issue 1, HUG Magazine briefly reported on the new organisational unit established at the Corvinus University of Budapest, which placed the emphasis on strengthening the role of geography in training courses in Economics. In July, 2015, the University concluded a strategic cooperation agreement with the Central Bank of Hungary, covering student grants, researcher mobility, the establishment of a new department at the Faculty of Economics as well as stimulating education and research in geography and geostrategy. By presenting the revamped organisational unit and its results, our article tells the story of how an old institute founded by Pál Teleki in the early of the 20th century–by cherishing its values–can give birth to a 21 st-century creative, strategic workshop.

GEOGRAPHY AND SUSTAINABILITY– ON ECONOMY WITH AN ALTERNATIVE APPROACH If the uniqueness of the GEO Institute must be briefly summarised, we could say that it seeks and collects the novel and alternative approaches to thinking about economy, and offers practical knowledge to the new generation in this perspective. Economy

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from the viewpoint of sustainability, society and community, environment and culture, globality and locality.

The mission of the Institute is to provide geographic, regional scientific, spatial and urban development knowledge required for exploring and managing regional, futurological, geostrategic and environmental features deriving from spatial and territorial existence, both in education and research, within the framework of business, economics and social sciences programmes within the current academic training structure. It is based on a multi- and interdisciplinary approach to science, building on cooperation.

The institute places great emphasis on the inclusion of young people; demonstrators and PhD students of the Institute are important figures of the workshop.

This way, a broader circle of students and doctoral candidates make its team of almost twenty members a diverse, creative professional community.

The thematic focuses of the institute include geostrategy and geopolitics, development policy and urbanism, and primarily their international dimensions. Methodologically, the focus is on public policy

planning and management primarily in a territorial dimension, which requires completely new approaches and toolkit in the 21 st century.

From an economic perspective, the role, development and planning of cities will definitely be more important. The Institute is committed to being the first workshop of urbanism and spatial planning based on economics and social sciences, which already remarkably manifests in the training content, the international relations and role of the Institute.

NEW, STILL OLD: FROM TELEKI’S INSTITUTE TO THE GEO-STRATEGY CENTRE Although the GEO Institute was established in its present form at the University in 2015, it provides new, integrated organisational frameworks for renowned workshops in related fields. The legal predecessor of the Institution is the Department of Economic Geography, which is one of the most prestigious and renowned founding departments of the Corvinus University of Budapest and its predecessors, but also the Department of Environmental Economics and Technology founded in the 1980s as well as the Future Studies community dating back several long decades continue their operations within the Institute.

The Department of Economic Geography was one of the first organisational units of the University of Economics established in an autonomous form 1948. The Department was founded by Pál Teleki at the Faculty of Economics of the Royal Hungarian University, which was established in 1920 and is regarded as a predecessor of the university. Although history remembers his undertakings in politics and public administration, for science Teleki was a noted geographer of his time, a world-famous figure of economic geography, who established a new school of thought. Not only was Teleki the first leader of the Department of Economic Geography, but he also organised the predecessor of the Corvinus University of Budapest, i.e. the Faculty of Economics of the Royal Hungarian Science University, and also led it as its Dean. The current portfolio of the GEO symbolizes the scientific and professional legacy of its founder. Teleki and the workshops founded by him did a lot for systematically pursuing governmental and public administrational background activities as well as planning and analysing ones. Furthermore, his work also had an environmental science aspect. The

matter of practical geopolitics has been also present here from the beginnings, as the preparation of the first map of ethnicities (“red map”) in 1918 is associated with the name of the founder, Teleki. He was the first to make geographic and spatial information recognised and indispensable in the university training courses in Economics in Hungary. He recognised that the knowledge of geography, of the spatial distribution of productive forces and environmental interactions are an absolute necessity for economists.

Futures studies–uniquely in the university sector in Hungary–has been present in an institutionalised form at the University since 1968, when it appeared as a centre and then, since 1989 it has been operating as an independent Department. The Department of Environmental Economics and Technology, representing the predecessor of the Centre for Sustainable Development of the GEO Institute was set up in the 1980s, and in Hungary it has become a prominent base for the research and education of combining environmental and economic aspects.

Since their establishment, the workshops of the Institute have been fostering a close relationship with practice, the design and planning of socialeconomic and environmental structures, relevant policy-making, and took part in important planning and decision-shaping activities. This direction could fully evolve since 2016, when, owing to an agreement between the Corvinus University of Budapest and the Central Bank of Hungary, practitioners of development policy, economic strategy and urbanism incorporating their experiences gained in Hungary and abroad in education and research could join the Institute.

REGIONS, CITIES, DEVELOPMENT AND GEOPOLITICS –NEW AND RENEWING EDUCATIONAL PORTFOLIO The new Institute quickly developed a significant new educational portfolio, thanks to both the involvement of practitioners and the positive cooperations of the host faculty. First, the Regional and Environmental Economics MA programme – on which enrolment at the Corvinus University of Budapest had not been possible for three years – was comprehensively renewed and re-organised. As a result of the development concerning 60 per cent of the training content of the programme, a practice-oriented training course providing planning and management skills was created, which specialised on development

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GEOGRAPHY, ECONOMY, STRATEGY

Budapest, Corvinus University study visits are available at several European educational establishments and even traineeships at companies and institutes. The majority of students take part in the diverse research and educational development programmes of the institute. With the help of the sponsorship of the Central Bank of Hungary, a total number of thirty students could attend conferences, summer universities related to their studies in the last two years. As for the latter ones, the summer university of FUDAN University must be highlighted, which was attended by two groups of ten students each at two different occasions.

ONE GLOBAL FACULTY, INTERNATIONAL DOCTORAL PROGRAMME

policy, cities and geostrategic-international dimensions among the similar training programmes of the country. Its success is demonstrated by the fact that the university has soon become a market leader in the country with this MA programme. An MA programme is planned to be launched also in English in September, 2018, extended by such knowledge that provides foreign students with insights into the economic and social systems of the European Union, CentralEastern Europe and Hungary as well as trainee opportunities. Apart from the MA programme, within the framework of a cooperation within the Faculty, two BSc programmes with elective specialisations have prominent roles. The Geopolitics specialization can be chosen by International Studies BSc students, while the Regional and Settlement Development specialization can be chosen by Sociology BSc students. The Central European Urbanisation course, which proved to be very popular as soon as it had first appeared, has been launched, among others, for the foreign students of the University,

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In addition, the Institute takes part in the other programmes of the University with several subjects on environment, economics and geography.

THE APPLICATION OF NEW METHODS IN EDUCATION One of the strategic missions of the Institute of Economic Geography, Geo-economics and Sustainable Development is to provide its students with a practice-oriented training programme, which guides them through to the world of work. The students are active participants of the programme from the very beginning, as they are supposed to fulfil most of their tasks in teamwork. Classroom sessions are often replaced by fieldwork or study visits. Thanks to the extensive professional and international contact network of the Institute, it offers trainee opportunities and operates a mentoring programme, and not only within the boundaries of Hungary. Furthermore, within the framework of the ERASMUS programme,

The Faculty of Social Sciences and International relations, which constitutes the immediate environment of the GEO Institute, is becoming a more and more international player, which is also indicated by the fact that the international dimension has appeared in its name recently, and it has been recruiting a growing share of its students from abroad. At this faculty, the global economic and geopolitical focus has been recently strengthened by integrating the Institute of World Economy into this organisational unit in 2015. Together with the institute of International Studies, Hungary’s most significant university faculty engaged in global issues has come into being, building upon fundamentals of economics, social sciences as well as geography.

This trend is further enhanced by a new doctoral sub-programme in geopolitics, launched by the International Relations Multidisciplinary Doctoral School, operating within the framework of the Faculty, and the GEO Institute. A specific feature of the new programme is that it involves three Hungarian universities in the implementation. Its very first announcement attracted considerable interest, as, after the entrance selection process, three foreign and six Hungarian students started the first academic year in September, 2017.

FUTURE STUDIES AND PLANNING IN THE 21 ST CENTURY –ON THE ROAD TO THE EASTERN-EUROPEAN WORKSHOP OF PLANNING It has perhaps never been so necessary for a country, a region or a city to give well-organised strategic responses to processes shaping its development as it is today, in the age of globalisation and a shifting

world order. It requires conscious, systematic, futureoriented thinking, and the corresponding alignment of policies and actions, that is, planning, both on national, regional and local scales. It is a widely accepted interpretation that planning is a social technique of shaping the future, which can be placed in the intersection of scientific activities, practical managementadministration and governance activities.

In Hungary, due to professional scientific antecedents and historical reasons related to social organisation, the currently existing profession of planning in a social-economic and spatial sense, or a similar system has not evolved. Despite the existing processes and tasks taking place in practice–on a national level, on an urban and regional scale, as well as in geopolitical and international dimensions–no unified professional approach has been developed in the countries of East-Central Europe yet.

The planning workshop function of the Institute is grounded on several unique elements. Corvinus is the only Hungarian university where a workshop dedicated to the education and research of futurology is present, in the GEO institute. This scientific basis and the fact that the collaborators of the Institute include key figures of such strategic planning processes as the Hungarian programming of the cohesive political period from 2014-2020, the creation of Hungary’s concept of regional development in 2005 and 2013, the creation of the Growth Plan in 2012, or the Territorial Agenda of the European Union determining the regional policy of the EU, make the Institute unique. (The team is also reinforced by the current and a former Vice President of the Hungarian Society for Urban Planning.) This firm commitment is also embodied in the ever-expanding selection of training courses related to planning and management.

All this forms an important part of the strategic goal of the Institute to become a prominent, scientific-educational planning workshop of the Central-Eastern European region. A decisive step towards this was that the Institute was the first one in Hungary to become an associated member of AESOP (Association of European Schools of Planning), an association coordinating workshops running training programmes or courses in planning, in July, 2017, and the Regional and Environmental Economics MA programme has been registered by the Association as an official European programme in planning.

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STRATEGY AND GEOGRAPHY IN UNDERSTANDING THE NEW SILK ROAD

BCE-Geocenter

Research in Geostrategy at Corvinus University Author: Márton Péti – Géza Salamin

The “New Silk Road” initiative of the People’s Republic of China, announced in 2013, also known as “One Belt, One Road”, marks a new era both in geopolitics and geoeconomics. The ambitious attempt to rearrange the monopolar world order might reshape the opportunities of Europe, including Hungary. Recognizing the significance of the subject matter, a Silk Road Research Team was set up at the Corvinus University of Hungary, coordinated by the Institute of Economic Geography, Geoeconomics and Sustainable Development and funded by the Central Bank of Hungary.

The term ‘Silk Road’ was first used by world-renowned German geographer, Ferdinand von Richthofen in 1877. The name designates the medieval trade routes on land and sea connecting East, South and West Asia with Europe and North Africa. Based on these historical traditions, Xi Jinping, President of the People’s Republic of China, announced the New Silk Road programme, later dubbed as the “One Belt, One Road - OBOR” strategy (Yi Dai Yi) in 2013, with the explicit aim of laying new foundations for the relationships between China and the Eurasian continent.

Practically, the One Belt, One Road initiative sets out developments and networking concerning Eurasia and, in some aspects, Africa, thus the entire old world, with special regard to the construction of continental and maritime transport corridors.

It is an important turn of events in itself that China as a major power challenging the monopolar world order officially expresses its global ambitions. Viewing from Europe, the fact that after long historical eras—it is a matter of approach whether after long centuries or decades—a power outside the Atlantic

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Area enters the global scene with a realistic global geostrategy is an even more significant change.

Furthermore, this time it is not a player adopting also patterns of European and Western civilisation such as the Soviet Union or Russia that seeks to build relationships and gain influence over the others also on the European continent, but a major power absolutely detached from the cultural area of Western civilisation. This is a historic change, which was heralded by a range of experts some time ago, and has been present even in public opinion, still, it is extremely exciting to be living it.

For the present, China as a developing and investing power is still not widely-known in Europe, and neither are all details of its intentions. Understandably, China’s actions trigger reactions full of helplessness and fear in many cases, especially among European players. At the same time, it is also clear for everyone that the large-scale Eurasian developments proposed by the Asian initiative imply enormous opportunities, too. Therefore, it is worth preparing as much as possible for this new situation and the opportunities, but also for the risks that it implies.

The position of Central-Eastern European Member States of the EU, including Hungary, might become all the more important in this new development initiative.

Most meeting points of the East and the West—reinterpreted by the New Silk Road initiative—can affect this region. In addition, the Eurasian scale is not unknown in this region, as the relationship fostered with the Soviet Union for decades under duress also promoted that.

Due to its geographical location, Hungary can fulfil an important role; it is not a co-incidence that several Hungarian geoeconomic intentions can be related to the New Silk Road (see e.g. the Opening to the East intention in foreign economy), even specific projects and trade agreements can be identified. The small countries of a region with a turbulent history, torn between major powers, but especially Hungary, should approach any global power aspirations with caution.

Despite China’s official communication, low-keyed as usual, it is obvious that the initiative serves China’s interests. Hungary should be well-prepared when approaching the specific investments and development opportunities slowly unfolding within the framework of the initiative.

Hungary was to explore the effects of the New Silk Road initiative on Hungary. The research work done so far has unfolded both in terms of exploring the geostrategic intensions related to the New Silk Road initiative and defining the structures of the “New Silk Road Economic Belt” as geographical space. Furthermore, in order to make the intentions and goals launching the New Silk Road initiative as clear as possible, specific current social, economic and even environmental policy processes of China, the major power initiating it, have been examined.

The research conducted was initiated by a workshop with considerable traditions due to its predecessor institutions, but founded only in 2016 in the present form at the Corvinus University of Budapest, and was coordinated by the Centre for Geostrategy of the Institute. The main motivation of the research undertaken within a cooperation between the Corvinus University of Hungary and the Central Bank of

The results of the researches were published in two books: the Geographical Dimensions of the New Silk Road Economic Belt (ed. Márton Péti et al.) and the Political Systems of the New Silk Road Countries (ed. László Csicsmann et al.) have been published.

The present issue of HUG is presenting some results of the research, and specific chapters of the former book in an edited form.

The Institute puts great emphasis on the renewal of educational methodology, and practice-oriented training (“learning by doing”). For this purpose, the students of the Institute have been involved in the research.

The Institute for International Relations of the Corvinus University of Budapest has also assumed an active role in the project. Its research team has prepared the cadastres and an analysis of the political systems of the countries in the Silk Road zone.

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HUG – HUNGARIAN GEOPOLITICS Author: PAIGEO

In March 2016 we launched HUG (the Hungarian Geopolitics magazine). Beside assuring professionalism, the quarterly published journal aims to promote the geopolitical thinking.

HUG1 – The age of geo-economics NORBERT CSIZMADIA Map of Understanding the 21 st Century – New Geostrategy Generations – 5 Challenges of the 21 st Century – Budapest HUB: Meeting point of world famous researchers – Noah Raford Strategic Planning – The Age of Geo-economics – Ágnes Bernek 21 st Century Geopolitical Strategies – From the Cathedral to the Geopolitical Negotiating Table – Friedman Trilogy – George Friedman Understanding What War Means in Europe – Stratfor’s Prognosis: 2015-2025 – Geopolitical Futures: The World in 2016 – Zoltán Baracskai: New Alexandrites – Creativity Is the Basis of the Future – Society with Creativity – 7 Indicators of an Advanced City – 25 Highly Livable Cities – A Capital of cyclists, green roofs and Innovations – Tina Saaby Copenhagen – A City for People – BUD: A Vision of Budapest – Why Do We Consider Budapest a Good Place?

– A Selection of Books on Geopolitics Published in 2015 – Film Recommendation – Ági Szalóki Music of Desire – Karády Tribute Concert in Japan – Hungarian Charm, Depicted by Hungarians – TOP 10: Hungarians at the Global Forefront

HUG2 – Knowledge and creativity

The changes of the 21 st century have intensified the geographical processes, geography is in the forefront again. Globalisation has entered a new phase, where in the successful countries the monetary policy, economic policy and the geopolitics is completely interconnected. The role of geopolitical games will be replaced with strategical games of geo-economy, where the competition is going on for closed markets. In the age of fusions and networks, interconnectedness and complexity becomes more and more important and besides the nations, the global cities will be the power centres of the 21st century.

Within two years, HUG magazine has become Hungary’s leading geopolitical magazine. In addition to the Hungarian and English language issues, a Chinese-language special issue has been published in November 2017. We have thousands of readers from more than 130 countries. The goal of HUG is to present our rapidly changing world, the importance of the geopolitical approach, the effects of new technologies on our everyday life and the rise of Asia, to a high professional standard, but in a readily comprehensible manner. Our authors include Hungarian and international experts, worldfamous professors, and the representatives of the new generation of researchers, who are committed to gather and present the scattered, yet coherent information crumbs from all over the world.

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The first edition of HUG which was published two years ago examined the trends of geopolitics, geostrategy and geo-economics in the 21st century with special attention to the spreading of geopolitical thinking. The second volume concentrated on creativity and the way technological advances are transforming education, looking for the answer to the question: what challenges will schools face in the future? HUG’s third edition focused on the grand vision of China’s foreign affairs: the Belt and Road Initiative. This New Silk Road edition introduced the history of the ancient Silk Road while outlining its many connections to today’s hugely important project in which Hungary also gets to play an important role.

The main topics of the fourth HUG magazine were changing infrastructure, new hubs of globalization and cities, while the fifth edition looked at the changing world of the future, examining the ideas of major thinkers on world order and their visions for the 2050s. The sixth volume focused on the connections of growth, knowledge and technology in this new era. The last, eighth edition concentrated on the role Central Eastern Europe how it became a gateway region and what forms of cooperation are in store for it in the long term.

GEOLECTURES: an international lecture series at Corvinus University – Bruno Giussani: The world is full of solutions – Invisible tomorrows: TEDxDanubia – The genome hacker: Interview with Yaniv Erlich – budapest brain bar 2016 – Where 9000 geographers meet – Cream of the crop: rankings of the best universities – The future of Stanford University – sandy speicher: Where are the creative leaders of the future? – Education reform in India – Sugata Mitra: The schools of the future will be self-organized systems – paulo roberto feldmann: The trick is to plan ahead – STANFORD AND SINGAPORE: Two paths of communication education – ALBERT-LÁSZLÓ BARABÁSI: Control, cell biology and success – DR. BARACSKAI ZOLTÁN: We should learn things when we need to learn them – MIHÁLY CSÍKSZENTMIHÁLYI MIHÁLY: How can we become a creative society? – Viktor Dörfler: A grandmaster projekt – An urbanization crisis in the developing world? – San Francisco: Cohabiting with creativity – India, a country of changes – The heart of Mumbai – Arjun Appadurai: The politics of hope – ISTVÁN SZILÁGYI: The geopolitics of five dimensional space – A new era of commercial satellites – After MaSat RadCube revolutionizes the space industry – Curating a digital repository with the curator of WIRED magazine – Books we recommend – Films we recommend – The story of Hungarian folk music

HUG 3 – ONE BELT, ONE ROAD One Belt, One Road – The Historical Silk Road – Hungarian Explorers of the Silk Road – Relationships of The Folk Music Corpora of the Silk Road – Silk, the Ancient Material of the Future – An Invisible Bond with Silk – New Explorers of the Oceans – The Geopolitical Significance of Piraeus Port to China – Silk Road in East-Central Europe – Hungary on the Silk Road – Xi Jinping–a Leader’s Profile – The Structural Transformation of the Chinese Economy – Security Challenges of One Belt, One Road – The Asia Infrastructure Investment Bank – China’s Cutting Edge: Research – China’s StartUp Incubators – Tsinghua University – China’s MIT – Accessible Knowledge – Belt And Road Summit, Hong Kong – On The Silk Road

by Motorbike – Silk Road Book Reviews – Fusions and Encounters Music Along the Silk Road – TOP 10 Hungarians in the Global Forefront

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hug – hungarian geopolitics

HUG 4 – GLOBAL CITIES Global Cities Redefined – Smart Cities – Addressing Social Challenges? – Modi’s Vision: Developing 100 Smart Cities in India – Smart Cities Programme in China – Shanghai on the Brink of Becoming a Global City – PAGEO GeoDebates – Debate on the Future of Smart Cities – The Athena Doctrine. How Women Will Rule the World – Niall Ferguson: The Great Degeneration – Brexit– A Milestone in the New Thirty Years’ War – Geo-Moment: The Map of Exploring the 21 st Century – The Crisis of Maritime Transport – 100 Years of the Trans-Siberian Railway – China’s High-Speed Railway Transport – China Catching up with the Developed World – How Brexit Impacts Japan – Books, Music, Reviews – Female Artists Around the World – TOP 10: Hungarians in the global forefront

HUG 5 – VISION 2050 Building “One Belt, One Road” in Cooperation between China and Europe – Prime Minister Viktor Orbán’s Speech at Lámfalussy Lectures Conference – The Cooperation of “One Belt, One Road” and Hungary – Geopolitical Thinkers of the 21 st Century – The Next 100 Years by George Friedman (excerpt) – World Economic Forum 2017 – Munich Security Conference 2017 – Futures Studies in Hungary – The Future of World Economy in 2050 – Demography and Sustainability – On the Energy Vision – Future of Cities – Technological Visions – 2050 – Singularity University – The Future of Education – Human Resources of Cyberspace – The Digital Economy – Security Policy Challenges and Trends in the Mid-21 st Century – 2050 – The Paris Agreement. The Peace of Westphalia 2.0 – Singularity and Synchronicity – A New Theory of the Sun and Life: the Helios Theory – Book Recommendations – TOP 10: Hungarians in the Global Forefront

HUG6 – Growth and technology Tech-tonic shift – A Hungarian Compass Between East and West – Ricardo Hausmann: The Growth And Diffusion of Knowhow – Learnings from Successful Economic Catch-Up Processes – Century of The British Empire, 1815–1914 – USA: In the Vortex of History – Italy: Successes Built on Tradition – Germany: An Economic Miracle Born from Ruins – Bavaria: In the Heart of Europe – BadenWürttemberg: A Forced Marriage with a Happy Ending – Austria: Crisis-Proof Austrian Rebirth – Finland: A Breakout from Crises – Sweden: The Home of Prosperity – The Polish Economic Outbreak – Israel: Advancement in the Rocky Desert – Japan: A Nation Reborn Twice – Korea: Skyscrapers Replacing Rice Paddies – In the Wake of our Economic Successes – Saint Stephen, the Builder of The State – Béla IV, the Second Founder of The State – The Golden Age of the Kingdom of Hungary – The Golden Age of Transylvania – A Country on the Road to Recovery – Happy Peacetime Days – István Bethlen, the Crisis Manager – Arduous Rebuilding – Shackled by Communism – Lost Decades – Hungarian Way – USA in 2050 – China in 2050 – Russia 2050 – India 2050 – The Vision of Japan and Korea – Africa 2050 – The Exponential Explosion – Hybrid Thinking – Education of the Future “Future Smart” – Parag Khanna: Connectography – How to Run a Country in the 21st Century? – Book Recommendations

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Pallas Athene Books

Specialized bestsellers in the Hungarian language

Pallas Athéné Könyvkiadó is dedicated to publish Hungarian-language economic, financial, management and geopolitical books, which have achieved huge success in the relevant disciplines and are known to millions of readers throughout the world. The first book was written by Asia expert Boyé Lafayette De Mente from the US under the title The Chinese Mind – Understanding Traditional Chinese Beliefs and Their Influence on Contemporary Culture. This book was launched on the first day of the Chinese New Year, on 16 February.

and exciting style. The busines administration and economics books aim to give the readers food for thought, contribute to the reformation of our business administration systems and, last but not least, offer an exciting pastime for getting acquainted with 21 st-century economy.

PABOOKS – Pallas Athéné Publishing

Pallas Athéné Könyvkiadó was founded in September 2017 with the aim of offering the readers wide-scale and practicable economic/financial and management knowledge as well as answering the current geopolitical questions about affairs taking place in the world. Bearing this purpose in mind, the Publisher releases the latest international bestsellers in economics/finance, geopolitics and management in the Hungarian language. Pallas Athéné Könyvkiadó welcomes its visitors with a wide assortment of books and fidelity program in the webstore.

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PABOOKS – Economics – Management and Geopolitics The mission of the Publisher is to inspire the wide reading public to innovation and new ideas, and to actively form public thinking. To promote a deeper understanding of contemporary social and economic processes, Pallas Athéné Könyvkiadó publishes research-based books on business administration and economics. All these books are recognized at the international book market and at the same time represent an easy-to-read

The science of management has a history of several thousands of years. The ancient Egyptians applied the functions of planning, organizing and management as early as during the construction of the pyramids. Nevertheless, the science of management, which holds together the planning, organizing, controlling, power-exercising and decision-making processes, was only born in the early 20 th century. Besides the management books, Pallas Athéné Könyvkiadó also aims to publish self-improvement books, as today it is becoming increasingly important to improve our skills and abilities. We have to know what abilities hinder our improvement and how we can change this. The self-improvement books help us with the improvement of a given ability so that we can achieve our ultimate goals.

To understand the events taking place in the 21 st century, we have to get acquainted with the geopolitical factors and processes. Geopolitics as a discipline is a rather complex field that requires an interdisciplinary approach, including history, political geography as well as international relations and diplomatic history. The theory of geopolitics has been developing rapidly in the past fifty years.

This discipline is defined in various ways; some focus on the study of the global balance and the global power balance deemed as permanent national interests, others emphasize the geographical determinedness of political historical models, and others suppose that geopolitics aims to highlight that political rule does not only depend upon human and material resources but also on geographical circumstances under which the power is exercised.

The first book published by Pallas Athéné Könyvkiadó is The Chinese Mind – Understanding Traditional Beliefs and Their Influence on Contemporary Culture by Boyé Lafayette De Mente. The US author, who is an Asia expert, presents China’s traditional values and norms of behavior that still fulfill an important role in the business life and social relations of the Chinese. In addition to that, the author introduces key areas that have changed thanks to the Western cultures and the market economy.

This book contains debate topics, questions and several dozen key terms for a better understanding of Chinese thinking. The keywords allow us to gain an insight into the essence of traditional Chinese thinking, which serves as a compass in modern times and determines the national character of the Chinese.

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The Chinese Mind

Boyé Lafayette de Mente

Understanding Traditional Chinese Beliefs and Their Influence on Contemporary Culture Boyé Lafayette de Mente’s book is an easy-to-read introduction of Chinese thinking by touching upon aspects such as the Chinese past, religious traditions or language, supplemented with numerous comments on their 20th-century history. In most cases the author explains each phenomenon in the light of facilitating business relations, related to the safest point of the Western people– comparing them to the Americans’ mind.

After briefly outlining some basic information about China, the author discusses the significance of the Chinese language. We can talk about seven, eight or even ten Chinese languages and several dozen dialects. The most important languages include Putonghua (Mandarin), Yue (Cantonese), Wu (Shanghaiese dialect), Gan, Kejia (Hakka languages), Min (spoken in Fuzhou) and Xiang.

The role of language in preserving and spreading Chinese culture All the languages of Chinese are tonal languages, and while the various variants use different vocabularies and pronunciations, they are all written with the same ideographical characters. Therefore, the unity of the country can only be maintained with the written language, which can be understood by even the citizens living in the most remote territories. Mandarin – the dialect spoken in the territories around Beijing – was declared the official language of the country by Mao Zedong after the foundation of the People’s Republic of China in 1949. Since then all Chinese people have spoken Putonghua besides their own dialect.

The characters, or Hanzis in Chinese, were already in use in China three thousand years ago; archeologists have discovered ancient objects bearing more than 4,600 characters. The pictograms of ancient times became more and more stylized, and by 1000 B.C. they had evolved into the ideograms that are known today. The number of ideographs grew into 6,000; however, it is enough to know 3,500-4,000 characters to get on well in China today.

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Chinese characters are transcribed into Latin script with the pinyin system, which has been acquired by over a billion Chinese and makes things much easier for foreigners visiting China. The system, however, does not match the English pronunciation of the letters, so we have to learn the letters corresponding to the sounds.

The end of this Part mentions the risks arising from the appearance and proliferation of the English language; Lafayette supposes that owing to the popularization of Western pop culture and the improvement of the youngsters’ English language command, the external influences on the Mandarin weaken its specific Chinese character. We ca talk about an increasing linguistic and cultural gap between the older and the younger generations. The author believes there is a strategy aiming to preserve their language in order to pass on their culture in this way.

The basics of traditional Chinese culture This part of the book collects the main characteristics of the Chinese society and discusses topics like the flexibility of ethics in various situations, which is related to China’s legal system in the traditional broad sense. Chinese law specifies only rules and does not provide for the rights of persons, so it cannot offer appropriate protection to the citizens.

Traditionally, law was interpreted by the leader, so it showed significant differences at regional level.

Besides the ambivalence of situational ethics and the legal system, their communication developed for their prosperity can be characterized with some kind of precaution and dichotomy but no definite ‘yes’ or ‘no’ answer. They express disagreement in circular sentences, avoiding the topics – foreigners often have difficulty in interpreting the reactions, which makes working relations and business cooperation difficult, too.

China has a vertical society – this implies the significance of hierarchy among people, which is probably the most determinant aspect of Confucianism. In the society everyone fulfils a given role; hierarchy ensures the set of rules for living together in harmony

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from the family to the top management. Mao attempted to destroy this ancient phenomenon and develop equality, but he only partially succeeded. The distinction of classes is still of special importance for the Chinese, and the various ranks are decisive in business life, too.

One of the main characteristic features of the Chinese is the desire to be self-sufficient – the famines and other difficulties striking them through history have encouraged them to stand on their own feet; they never exclusively rely on their partners during their cooperation but submit common work to the full knowledge of information and technologies.

Their society is far more formal and structured than that of the Western cultures, and although the Chinese exposed to foreign effects seem to stick to their rigid traditions less, they still determine business life.

Eating is also significant because of the frequent starvations; delicious courses mean abundancy and careless life. Thanks to the geographical extension and ethnical diversity of the country, we can talk about various Chinese cuisines. The health-preserving effect of food is emphasized; Chinese medicine classifies the basic ingredients and suggests consuming various types of food in equal proportions.

Abundant dinners are essential in business life, too; the Chinese host their guests enthusiastically and introduce them to the unique Chinese gastronomy.

The book also mentions China’s traditional lunar calendar as part of the traditional culture. Actually, this calendar is a mixture of the lunar and solar calendars. Their traditional calendar is important for determining the time of festivals; they arrange their everyday life to the Western calendar. The most important festivals, which fall on different days in the 365 days of the Gregorian calendar, are the Spring Festival - which is the Chinese New Year -, the Dragon Boat Festival and the Mid-Autumn Festival.

Their traditions and festivals have evolved from the mixture of the effects of Confucianism, Taoism and Buddhism. After outlining the significant festivals, the author discusses the importance of martial arts and calligraphy, too.

Chinese culture today Part III presents the current status of Chinese culture, especially the changes caused by external influences. The mixing of Eastern and Western cultures and the breakneck speed makes the country really exciting. According to the author, one of the external

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effects is the growing profusion of Western-style buildings; the buildings designed with state-of-theart and advanced technologies could drastically change the image of China’s coastal cities in the time of several decades.

As the American pop culture is rising in popularity, Chinese mentality is also changing: collectivism, which has been typical of our society for several thousand years, is gradually supplemented with individualism; the increasing entrepreneurship and opportunities of individuals have improved the living standard of the people and rapidly enhanced the economic development and wealth of the country, thanks to the transformation to a market economy.

Great significance is attributed to the appearance of the internet and computers, which played a key role in the opening of China and informing of the Chinese people, even despite of the censure and firewall restricting contents. The individuality of the actors of Western video games has a great impact on the thinking of Chinese youngsters.

Besides the Western influences on China, the increased significance and proliferation of Chinese culture can be observed in both Europe and America more and more clearly. Not only the large number of Chinese citizens living and working abroad take their attitude and traditions with themselves but the demand for immersing in them appears more and more frequently at the level of Western entrepreneurs aiming to enter the Chinese markets, too. The wealthy and high-powered Chinese corporate managers are more and more influential outside their country, too, and their luxury properties can be found all around the world.

In China Mao Zedong is famous for improving the status of women: he set the aim of eliminating gender differences, but the more and more open Chinese economy also favors girls and women, who are present in the education and at the labor market in an increasing number. American pop culture did not only affect fashion or beauty ideals. It was important in China’s sexual revolution, too. While forced marriage used to be typical for thousands of years, today the atmosphere is free and the Chinese youngsters’ partnership habits are moving closer to the Western people’s ones.

The entertainment industry has also been influenced by the foreigners; the bars and entertainment facilities in Chinese cities operate at the Western standard. Still, the most striking feature is perhaps the

proliferation of foreign fast-food restaurants, which have flooded Chinese streets and even resulted in the opening of plenty of Chinese restaurant chains in Chinese property.

Today the life of Chinese society cannot be discussed without mentioning shopping. These days we can find the stores of any global luxury brand in the country; the shopping streets are very much like the ones in any other city of the world. In addition to that, foreign supermarkets have emerged, offering wide selections of Western foodstuff to the Chinese customers of a slowly changing taste.

The spreading of Western sports and the Olympic fever in China are of huge significance. This process culminated in the arrangement of the Beijing 2008 Olympic Games, which offered an opportunity to China to demonstrate to the world how fast it develops.

As we can see, the external influences affecting China have not only changed their society but launched processes as a result of which the country has managed to take the lead in numerous fields where it was not present at all a few decades ago. Its automobile production and film industry are world-class, and the country also produces better and better results at the level of higher education. Thanks to its presence at international level, important products of its culture become available to millions of citizens of other countries. Chinese toys such as Mahjong are known all around the world, Chinese medicine has more and more followers, their traditional philosophy has raised the interest of masses of people, while their natural and manmade sights attracts thousands of tourists into the country.

Keywords are Chinese mind and behavior The last section of the book, Part IV explains fifty important Chinese words or phrases including both philosophical terms and colloquial expressions.

Some of them are as follows: Buzhidao, means “I don’t know” word-for-word and implies a deep cultural content. Besides the idea of collective responsibility rooting in Confucianist traditions and strengthened in Mao’s communism, the Chinese are inclined to avoid responsibility.

Hence, “I don’t know” often means “I don’t care” or “Don’t bother me!” It is frequently used, often by government officials. Private persons also tend to avoid responsibility and prefer taking the team approach.

De is generally translated as “virtue”. In accordance with Lao Tzu, when human beings are born, they are naturally endowed with virtue, a society is built on it, so no laws and other restrictions are necessary. The only legitimacy for a ruler was virtue; this kind of man or woman could resist the corrupting influence of power and conduct the affairs of the state in a fair and just way. Although there are only few virtuous leaders, such human beings are followed by others without further thought.

The word guanxi means “connection” and is one of the terms having the largest influence on the Chinese economy. The principle of “it’s not what you know but who you know” has been part of Chinese culture for thousands of years. In the cascading relations system it is impossible to make progress without acquaintances.

Mianzi, meaning “face” is the element of Chinese culture that plays the most significant role both in social and in business relations. “Face” here refers to a form of personal integrity, the social image of the person.

You can either lose or win a face, or you can even give it to someone else to show your respect. Causing other people a loss of face is a serious offence.

Qingke means “to host” word-for-word: to share food with family members, friends and business partners, which is of special importance in China. Their business relationships are far more personal, and one of the ways to strengthen the ties is eating together.

Smothering the other party with the most delicious meals and drinks is a straight line to success; the attendance of foreign guests is especially spectacular at such an event.

The Chinese use the word Wenhua ”culture” for their culture, but very often they expressly refer to their special mindset and five-thousand-year-old civilization. Confronting the “traditional culture” as the aim of the cultural revolution also used this character. Among others, it is significant because of the frequent reference to it in contexts such as the Chinese mind sharply differs from the Americans’ mind Lafayette’s book aims to provide a brief and easyto-read summary of the Chinese mind so that both the people intending to make business deals with them and those interested in the country can get acquainted with their culture. The comments and questions closing the subparts not only give the individual readers food for thought but might serve as the basis for gripping discussions and debates.

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THE SUN AND A NEW THEORY OF LIFE: THE HELIOS THEORY

The connection between the most recent results of solar research and the ecological civilisation.

Author: Attila Grandpierre

The Sun is the cosmic foundation of our life. In the past four decades, such facts have been revealed about the origins of solar activity that have led to recognizing the Sun as a cosmic living organism, i.e. the Helios theory, which was elaborated with the help of a scientific worldview in which the exact science of life and self-consciousness are grounded, and which harmonises matter, life and self-consciousness. Interestingly, this comprehensive worldview manifests unique series of surprising coincidences with ancient Chinese philosophy and can serve as a scientific base to build an ecological civilisation.

We could think that our life is determined by direct material relations: eating, breathing, orientation, travelling seemingly depend on our immediate environment. Surprisingly, what plays a crucial role in creating, maintaining and managing life is not our immediate, or even our broader, environment on Earth but a factor in the sky, from a distance of 150 million kilometres: the Sun. Processes that allowed life and mankind to come into existence in the universe had evolved on this distance planet.

Up to this day, the physical nature of the Sun has been regarded unquestionable without any targeted analysis. As a result, the accepted scientific belief is that the Sun is “a luminous ball of gas that produces energy by the nuclear fusion” (Ridpath 1997, p. 450).

This common view, however, should be re-evaluated in the light of fresh evidence emerging from several sources.

Undoubtedly, solar physicists have extensive knowledge about the Sun. There is one thing, however, that they cannot explain, and this is solar activity. My research of four decades into the origins and ultimate

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causes of solar activity has led me to the conclusion that the Sun changes a billion times faster during solar activity that it is expected on the basis of the standard solar model. What process can accelerate the magnetic field of the Sun by a billion times of what is physically expected? Oddly enough, this change accelerated by a billion times, instead of slowly levelling off and dying away as the laws of physics prescribe, is continuously regenerating. The formation of the dynamo that is required to explain these changes is one of the greatest mysteries of solar physics. Not by chance. A dynamo is a very complex machine; remarkable knowledge and tremendous engineering feat are required to create one. It was invented by Ányos Jedlik in 1861, based on Faraday and Maxwell’s electromagnetic theory. How can the Sun create such a dynamo? A closer examination of these questions has led to developing a new theory of solar activity, the Helios theory.

Several predictions of this theory have proven to be true, and – as it seems – it should be taken seriously.

Beyond doubt, mass flows transporting magnetic

fields in the Sun’s interior are responsible for accelerating the solar activity by several billion times. These mass flows crease, smooth and disperse magnetic fields no less than several billion (!) times faster than the equations of the star structure would indicate. On Earth, only living organisms can do so, since biochemical reactions take place several billion times faster in living organisms than under laboratory conditions, in the test tube. This is the first sign that a physical approach is not sufficient to interpret solar activity.

During the decades of my research a whole range of new sciences has developed, which provide a completely new context for a better understanding of the Sun. As it turned out in the last century, theoretical biology, developed by Ervin Bauer, is the only type of biology that can advance in the development avenue of modern science, and, while retaining and further developing the greatest reflections of physics, it has created its theory based on the universal life principle. Not only have I further developed the toolkit of physics, but I have also got as far as developing quantum physics. In quantum physics the detector plays a central role, and therefore it depends on the general theory of detectors, as one of the fellow scientists of Werner Heisenberg, the father of quantum physics also recognised and discussed with the author of this article. Theoretical biology, achieved by developing quantum physics further, can be regarded the biggest leap after quantum physics. I realised that the fundamental principle of the biology that Ervin Bauer developed is extending the fundamental principle of physics over the realm of life, and it penetrates the Universe more profoundly than that of physics.

Therefore, the Universe can be regarded to be more of a biological nature than a physical one. And if the world is principally of a biological nature, the Sun also can be principally of a biological nature. Our aim is to revise the image created about the Sun couple of hundreds of years ago.

Especially, because information theory has evolved in the meantime. If we consider it when examining the Sun, it might occur that, in addition to its light and heat, sunshine can play a substantial role in the evolution of life on our planet because of its information content. Anthropic cosmology, in fact, biofriendly cosmology, has evolved, which is based on the facts that constants in physical equations, such as speed of light, the mass of an atom, strength of physical interactions, etc. all fall within a narrow

range of possible values that is favourable for the development of life. Today, it is widely accepted that we live in a biofriendly Universe, favouring life. If the entire Universe is biofriendly, the Sun is likely to be biofriendly, too; it is high time to examine the Sun from this new viewpoint. The independent science of astrobiology has also evolved, which has become one of the fastest growing branches of modern science. Astrobiology is a science studying the relationship between the universe and life, and is based on a statement made by Nobel Prize-winning Christian de Duve: life is a cosmic imperative, coded in the laws of nature, thus it is bound to arise wherever proper conditions prevail, and even where they do not, processes are bound to reach that end. If processes all over the Universe are bound for life, then the only question is to what extent these processes bound for life prevail on the Sun.

„For the Earth, the Sun is the greatest natural resource.”

The significance of all these are further enhanced by the emergence of the Gaia theory, which, again, evolved independently. James Lovelock discovered that the Earth is a self-regulating system, controlling the changes in the atmosphere, the crust and the biosphere to keep environmental conditions near the range that is most favourable for life. If one planet of the solar system is a self-regulating, life-like system, it is even more timely to examine the processes taking place on the Sun from this respect.

Nevertheless, the current situation of mankind, the ecological crisis make it imperative to re-evaluate our entire worldview and to appreciate Nature. For the Earth, the Sun is the greatest natural resource.

At the current rate of energy consumption, mankind consumes as much energy in one million years as much the Sun generates within one second. According to some predictions within fifteen years, while according to other predictions, within thirty years, solar energy will become the greatest, and, in addition, environmental-friendly, renewable and inexhaustible source of energy. Planting solar panels in one small corner of Spain would provide energy supply for entire Europe. The Sun will play a central role in our everyday life, and this fact considerably appreciates the Sun.

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ORIGINS OF SOLAR ACTIVITY Today’s astronomy can describe only the static, relatively permanent side of our Sun. But our Sun has another, much more exciting and scientifically still unexplained side: this is solar activity (Figure 1).

Figure 1 Solar activity generates active, moving hot spots and dark sunspots on the surface of the Sun. Sunspots are brought to the surface by mass flows taking place in the Sun’s interior. In sunspots, the magnetic field is much stronger than in their surroundings, therefore mass is thinner in them and they look darker. Great solar flares tend to appear on top of the loop-shaped bundles of magnetic flux connecting two sunspots and protruding upwards. But what generates these mass flows?

According to a currently popular theory of solar activity, sunflares emerge in the outer atmosphere of the Sun, as phenomena of electrostatic discharge similar to the lightnings of the Earth’s atmosphere.

As a contrast, I have pointed out that solar activity is comparable to a volcanic activity. It must start from deep in the Sun, because there is neither enough substance nor energy in the atmosphere for solar activity, and these ‘sun-lightnings’ of the Sun’s atmosphere would not be able to change magnetic fields cyclically under the surface of the Sun. Solar activity is bound to start from within, from the depth of the Sun. I have proven that the Sun’s rotational energy is released, just like in earthquakes, in a point-like region in the Sun’s interior from time to time, when

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growing tension bursts out due to the interplanetary space braking the rotation of the Sun. Similar to volcanic magma, the rotational energy releasing suddenly heats the point-like area of the solar core to a very high temperature. I have noticed a very important factor.

When this hot area evolves in the energy-generating core of the Sun, core reactions also contribute to heating. Core reactions accelerate at a higher temperature, and their energy generation multiplies. When deep in the Sun, an area gets hotter, core reactions generate energy faster due to the higher temperature. If energy is generated faster, it will become even hotter, which further accelerates energy generation – and so on. A self-accelerating, explosively heating area evolves. This area explosively broadens as long as buoyancy, exerted by dilatation, flies the entire hot bubble from the solar core towards the surface of the Sun. On its way to the Sun’s surface, the hot bubble, gaining speed because of buoyancy, reaches colder areas.

The accelerating speed of the hot bubble is calculated to reach the speed of sound decreasing towards the surface near the Sun’s surface, and a sonic boom occurs. In the sonic boom, the energy of the hot bubble is transferred to a high-energy particle beam shooting upwards. This high-energy particle beam, going outwards in the atmosphere of the Sun, collides into the top of the bundle of the magnetic flux transported to the surface by the hot bubble, and the sudden slow-down of the high-energy particles results in sunflares causing bright flashes of light. Instead of solar lightnings, we can talk about solar volcanos.

My theory, developed in full detail with the help of the numeric calculations of Gábor Ágoston, has raised the attention of Robert Ehrlich, Professor at the George Mason University. Our calculations have indicated that the hot bubbles generating in the solar core produce such heat waves that persist for millions of years. Since they are generated in every 11 years, these heat waves slowly add up while spreading in the Sun’s interior, and reinforcing each other’s effect, they are able to heat up the entire solar core.

Ehrlich calculations suggest that these heat waves make the temperature of the solar core fluctuate and change cycles lasting either 100,000 or 41,000 years. This result has hit the headlines of the New Scientist and become something of a scientific world

sensation because exactly these cycles lasting either 100,000 or 41,000 years are the two major periods of Ice Age on the Earth. Thus, the Ice Ages on the Earth are closely related to the pulsation of the solar core.

THE SUN ITSELF CREATES THE DYNAMO, THE ENGINE OF SOLAR ACTIVITY The big question is how these mass flows are able to generate magnetic fields. A dynamo is required to convert the kinetic energy of the mass into magnetic energy. The dynamo is the reverse of the electric engine, because the engine converts electricity into kinetic energy. (Figure 2)

Figure 2 The dynamo is a sophisticated machine, in which the relative movement between magnetised parts generates electromagnetic fields. According to solar physicists, the dynamo is one of the genuine “mysteries” of astrophysics.

(Carpenter et al., 2005).

Since neither an engine nor a dynamo is easy to design, such dynamo cannot come into being by physical means. On the Earth, dynamos are created by people or living cells, since molecular machines are produced in cells. But only living organisms can create a dynamo on the Earth, then how is it possible for the Sun to create, then get rid of, then re-create its own dynamo in every eleven years, without solid parts, of malleable mass?

This thread, connected to the dynamo, of examining the origins of solar activity also led to the question

whether the Sun is possibly life-like. In order to decide it validly, we need exact biology. As I am a Hungarian researcher, fortunately Ervin Bauer’s theoretical biology, published only in Hungarian and Russian up to this day, is available to me. The Bauer principle provides that the distinctive feature of the work performed by a living system is that it is aimed at renewing their ability to perform work.

It requires special efficiency, organisation, and an extreme acceleration of processes recharging a discrepancy in energy. The fundamental principle of living organisms is represented by an inevitable occurrence of processes diverging from the thermodynamic equilibrium. The discoveries of astrobiology provided conclusive empirical evidence for the universal fundamental principle of biology (Bauer 1967, Grandpierre 2007). Life as a cosmic phenomenon is significantly independent from matter, it is not bound to carbon, proteins or DNA, because its essence does not lie in its material carriers but the behaviour of the living organisms. The activity to sustain life is necessarily and inevitably in place in the behaviour of all living organisms. This universal law of life is provided by the universal fundamental principle of biology, which provides that all living organisms use all their energy in every moment to avoid the equilibrium which should be established under the given initial conditions by the laws of physics (Bauer 1967, 51; Grandpierre, Chopra and Kafatos 2014). If the entire Universe is pervaded by the fundamental principle of biology, then the Sun should also be pervaded by it. The fundamental life principle is the law of the change of charges. These biological processes, which are against physical changes, are instinctively self-initiated by living organisms.

How can living organisms initiate their own behaviour? Our mindset, being used to the exclusiveness of physical causes, finds it hard to understand it clearly. The difference between an action and an event lies in the fact that a physical event takes place as a result of merely physical causes, external circumstances and inertia. On the contrary, what makes an action is the fact that it is different from an event because it is the living organism itself that creates a cause and these biological causes direct the course of action. Recently, a collaborator and I have developed the theory of biological autonomy in full detail (Grandpierre 2012, Grandpierre and Kafatos 2012, 2013). Biological autonomy is based

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on our ability that we, as living organisms, are able to have biologically controlled energy. Decisiveness is the bridge between biological and physical causes. Our biological aims become physical realities by means of our decisions. Physical causes can enter the world of physics within the limits marked by the uncertainty principle of quantum physics.

These limits are seemingly tiny, since they are applicable to the life of elementary particles. The uncertainty of quantum physics allows biological causes interfere with the physical world, within the framework provided by the uncertainty principle. But, since each elementary particle has a tiny bit of uncertainty, and the number of elementary particles in living organisms can be measured with astronomical numbers, it all adds up and even these tiny bits of quantum effects result in significant differences between the behaviour of physical objects and living organisms.

AN OVERVIEW ON SOLAR ACTIVITY The Helios theory has proven that the Sun initiates quantum-level interventions from its own structural level, in a way so that they should lead to a result in line with the principle. The essence of solar activity is that the sun is continuously mobilizing its energies in an extraordinarily special way so that the conditions of the energy mobilizing activity should be continuously recreated. The changes in the energy of the Sun, that is the work of the Sun, allow the most work possible. Therefore, the Sun initiates quantum-level interventions in the solar core to create such a dynamo that generates the magnetic fields required for solar activity, aligns and consistently organizes mass flows and the changes in magnetic fields. We have found a remarkable range of evidence, implicating that the Sun initiates and organizes its own activity. Our theory is also supported by a numeric simulation and its fully elaborated version was named the Helios theory (Grandpierre 1990, 1996a,b, 1998, 2004, 2015a,b). Our prediction about the discovery of the dynamic processes of the solar core has already been justified. The new theory of the solar core predicts that the Sun can enhance the tiny effects of planets to an extreme extent if adequate internal conditions prevail. The effects of planets act as a kind of key stimuli, triggering sunquakes, sudden, point-like releases of rotational energy in the solar core (Grandpierre 1990, 1996a,b). In the

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hypocentre of sunquakes, hot bubbles are formed, which can elevate onto the surface, and there they trigger surface solar activity. Our prediction that thermonuclear runaways occur in the solar core has been confirmed by others as well (Hiremath 2010, Haubold and Kumar 2011, Scafetta 2012, Yndestad and Solheim 2016). Similarly, our prediction that hot bubbles are formed in the solar core has been supported by others (Wolff and Donovan 2007, Wolff 2009).

The four decades of my research show that solar activity is initiated by the Sun itself for biological aims, to sustain its own activity. My research has led to an unexpected result: it created a new image of the Sun, in which the Sun is a living organism, that is, it is similar to the ancient view of the Sun being a sun god, Helios. After having read the English manuscript of my book on the Helios theory, James Lovelock, a prominent figure of British science, who has grounded the theory of the Earth being alive with his book Gaia, endorsed the book with the following words: “A shining book illuminated by the effulgence of our own star, the Sun. For the serious scientist a primer on Solar System Science.”

AN EXPERIMENT ADEQUATE TO CHECK THE HELIOS THEORY EMPIRICALLY: THE SOLARIUM EXPERIMENT All light carries information. If the Sun is a living organism, it can carry information also about the living nature of the Sun. In this case, sunlight, due to its information content, might mean extra information for life on Earth. During its existence of four billion years, life on Earth must have learnt how to use the information content of sunlight, if there is any. We have designed an experiment to test one of the predictions related to the biological nature of the Sun of the Helios theory empirically.

In a greenhouse, a tomato plant is given whatever matters in a physical sense: an abundance of nutrients and energy, creating virtually optimal environmental conditions. In comparison, the life of “wild” tomatoes grown outdoors might seem sheer deprivation, hardship and struggle. Still, tomatoes grown outdoors are tastier, have better biological effects compared to the “civilised” artificial ones grown in greenhouses.

Something is missing, because if only substance and energy mattered, greenhouse tomatoes should

outdo “wild” tomatoes from all respects. However, a lot of observations contradict this. Something is missing, and this something might be, among others, informationbiological information that can play a role in the formation of life, the development of a tomato. And this can be proven or denied with experiments. If the Sun is alive, the vitamin, flavonoid and flavour content of tomatoes grown in a solarium is even less than that of tomatoes grown in greenhouses. This experiment is not very expensive, and is

relatively easy to conduct. Its significance, however, might be greater than that of extremely expensive experiments of particle physics.

THE SUN IS A COSMIC LIFE FORM Consider that in the light of the revolutionary discoveries of astrobiology, life is the basic phenomenon of the Universe. Physical conditions are extremely diverse in the Universe. The ability of life to adapt to

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extreme circumstances is much greater than it has ever been presumed. Under these extremely diverse circumstances life can take extremely diverse forms.

The Earth is just one example of life; we do not know what other forms it can take, even not protein-based ones. There are more than forty billion planets in the Milky Way galaxy. Life can also exist on the moons of planets and cosmic clouds, not just on planets. According to James Lovelock’s Gaia Theory the Earth behaves like known life forms: it regulates physical conditions essential for life to remain in the range most favourable for its life. If the Earth is a kind of cosmic life form, the Sun, which ensures this selfactivity in the most favourable way for solar activity,

nature of the sun is proven, in principle the Sun can process much more information per second than the information processed by terrestrial living organisms. Tribus and McIrvine have published an article in the “Scientific American”, claiming the entire energy content of sunlight is likely to contain so much organized information that its volume possibly exceeds the information processing capacity of mankind and even all terrestrial forms of life. If the term “living organism” evokes familiar, terrestrial forms of life, it is more fortunate to regard the Sun a kind of cosmic form of life and not a living organism.

cannot be denied of this.

If we define living organisms as the currently known living organisms of the Earth, the Sun is not one, because the living organisms of the Earth pursue a metabolic, reproductive way of life, maintain vital relationships with their environment, and consequently an extremely rich and complex information flow takes place between them and their environment, and they have the necessary apparatus to absorb and react to information.

Unlike terrestrial living organisms, the Sun relies on its own energy source. Thus, it does not need a metabolism with its environment. The lifespan of the Sun is ten to fifteen billion years, comparable with the age of the Big Bang, thus the “reproduction” of the Sun requires qualitatively different means. If sunlight carries biological information, it might play a key role in the formation of life on the Earth, and we van presume that terrestrial life is the child of the Sun.

THEORY, AN INTEGRAL WORLDVIEW, ANCIENT CHINESE PHILOSOPHY AND THE ECOLOGICAL CIVILISATION

The Sun has an extremely rich internal life. Its information processing mechanisms are yet unknown.

One thing is sure: the Sun’s mass consists of hightemperature plasma permeated by electromagnetic fields; partially or entirely ionized matter. Such plasma is the most complex matter of the Universe.

David Bohm had the impression that plasma had a life-like behaviour, due to their surprisingly highlevel of organisation, an abundance of their cooperative phenomena and their extremely sensitive ability to react to internal and environmental changes. The temperature and the pressure in the interior of the Sun generate very favourable conditions for electric currents of a threadlike structure to form very easily, almost spontaneously, as electronic stimuli form in the neurons of the human brain. If the biological

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THE RELATIONSHIP BETWEEN THE HELIOS

The research into the origins of solar activity and the simultaneous developments of interdisciplinary sciences attach considerable weight to the conclusion that the Sun must be a cosmic life form. This outcome fundamentally concerns our entire worldview. The main aims of mankind include the development of a healthy civilisation being in harmony with life, common sense and Nature (Grandpierre 2002, 2012b, 2017b). Above all, building a healthy civilisation requires a healthy, balanced, that is fundamentally comprehensive worldview. Worldview determines what the important questions are, and how answers to them should be sought, and what is considered an acceptable answer. Worldview determines the fundamental direction of building the future. A healthy, integral and comprehensive worldview requires exact holistic science, grasping the essence of the Universe in its entirety. We propose that holistic science, embracing all really important realities can be achieved if it is based on the holistic theory of matter, life and self-consciousness (Grandpierre 2012b, 2017b).

Modern science built on the exclusiveness of physics is not complete. Building on Ervin Bauer’s landmark work, it has been proven that biology has laws that are not deducible from physics. The fundamental principle of physics can be deducted from the fundamental principle of biology, and laws of physics can be deducted from the fundamental principle of physics. Consequently, physics is not the only fundamental natural science. While construing the fundamental principle of biology, it has turned out to

be inseparable from biological autonomy. Holistic science has found the fundamental principle of matter, life and self-consciousness, and demonstrated that they can be conceived as various cases of the same cosmic principle, with the life principle being the most general and fundamental of all.

The comprehensive scientific approach that we had to develop for the Helios theory had to include biology. As a result, it means a scientific worldview that is broader, balanced and more profound than that of modernity. We have got to a complete, healthy worldview, which is based on exact primary principles also described mathematically. This healthy worldview can provide scientific grounds for developing a healthy civilisation in the same way as the hegemony of physics provided the grounds for modernity.

”This healthy worldview can provide scientific grounds for developing a healthy civilisation in the same way as the hegemony of physics provided the grounds for modernity.”

Developing a coherent, holistic, comprehensive science is a basic aim of constructive postmodernism, associated with Whitehead. As Whitehead has put it: philosophical knowledge is an endeavour to frame a coherent, logical, necessary system of general ideas in terms of which every element of our experience can be interpreted (Whitehead 1978, PR, 3). In the opinion of Cobb and other constructive postmodernists, such comprehensive world model is possible and necessary (Cobb 2002, Griffin 2007, 5-7). The Helios theory and the comprehensive scientific worldview place physics, biology and psychology onto the same grounds and align them, based on the first principles. They provide biology and psychology with a fundamental principle of their own, attributing a theoretical basis and significance similar to modern physics. The Helios theory and a holistic natural science reconcile natural sciences, humanities and

social sciences. A clear definition of the life principle provides a scientific basis for developing ethics, in which respecting, supporting and enhancing life are regarded as major basic ethical principles (Schweitzer 1923, 94; Macer 1998, 146-147).

Whitehead’s philosophical work was based on his conviction that religion and reason must be, and can be, reconciled. In these days, it means reconciling religion and science. A holistic and comprehensive science can remedy the estrangement of Nature and society, ensued by modernism. The holistic worldview remedies the secession between science and religion, because the three fundamental principles of the Universe form a coherent, harmonious whole, the unity and harmony of body and mind, matter, life and consciousness.

This essentially complete worldview can remedy the detachment and disharmony of sense, sensation and intuition. Comprehensive science says matter is governed by the fundamental principle of physics; sensation and intuition are governed by the fundamental principle of life, and logical thinking is basically governed by the fundamental principle of self-consciousness. Matter, life and self-consciousness are in basic harmony, because the living Universe is an integrated whole of matter, life and self-consciousness.

These basic, all-encompassing cosmic principles can be regarded the most profound essence of the Universe, the innermost core of Nature (Grandpierre 2011a,b). Remarkably, the most fundamental of these three fundamental principles, which encompasses and integrates the other two, is the life principle. The most fundamental nature of the Universe is its being alive (Grandpierre 2002, 2012b, 2017a). It is Life is that embraces the Universe; matter and consciousness are also the manifestations of Life. One day all of us will realize that life is not a tiny sparkle somewhere in the depths of our body, but the eternal cosmic flame itself, the primal reality embracing the entire Universe.

Surprisingly, our integral worldview demonstrates a range of similarities with the works of Alfred North Whitehead, John Cobb, David Ray Griffin, Thomé H. Fang and Zhihe Wang, constructive postmodernism, and especially the philosophy of the high culture of the ancient Silk Road, the ancient Hungarian tradition, and, it must be emphasized here, ancient Chinese philosophy. We think the most fundamental difference between the modern Western mindset

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and the ancient Chinese one is ontological: according to modernity, exclusively matter is the fundamental being, while the Chinese mindset is that life is the most fundamental, the source of all other realities.

The cosmic life principle can be conceived as an exact, scientific definition of ‘Qi’. Since life itself is the creative force, an uplifting force creating new life, an internal force that is aimed at creating the most beautiful and sublime life possible, the cosmic life principle can be identified with creativity. In this regard, the life principle of the holistic natural science is identical with Whitehead’s process philosophy (Whitehead 1978, 31), as well as with ancient Chinese philosophy.

The following statement can be found in the Book of Change: “The fulfilment of Nature which is Life in perpetual creativity is the gate of Wisdom bodying forth the value of Tao and the principle of righteousness”, writes Thomé H. Fang, a prominent figure of twentieth-century Chinese philosophy.

We can call such ethical features of activities righteous that help, improve and fulfil life. The life principle naturally entails the love of life, and even an emotional commitment to life manifesting in actions. Life is qualitatively more than modernity can see it, because its essence is granting victory to complete integrity and beauty of life. Since the life principle impels all living organisms to live the most complete, most beautiful, happiest and truest life (Grandpierre 2012, 2017a), life is the basis and cosmic source of goodness. Life is good because it aims at preserving, embellishing and transmitting life.

Remarkably, the integral worldview discovered during the development of the Helios theory demonstrates a range of similarities with ancient Chinese philosophy. These similarities include the next six, essential elements: knowledge of the life principle, being the most fundamental principle of the Universe, change, creativity, goodness, and comprehensive harmony.

The fact that six such unique features match is hardly a coincidence. Since Western modernity lacks them, it is worth overviewing the connections between these features.

The starting point of holistic science is the life principle, because all existence starts from it; the cosmic life principle is the most fundamental principle of the Universe. Similarly, in Chinese

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philosophy, ‘Qi’ or ‘c’hi’ is the cosmic life principle, the ultimate basis of all beings of the Universe, the source of the existence of the Universe (Zhenyu Zeng 2011). German Sinologist De Groot calls the ancient Chinese system of metaphysics, the basis of the entire Chinese philosophy “universism” (De Groot 1912; Glasenapp 1975, p141). All Chinese traditions “converge on one essential point: The Universe, as it is, represents an all-comprehensive Urge of Life, an all-pervading Vital Impetus, not for a single moment ceasing to create and procreate and not in a single place ceasing to overflow and interpenetrate” (Fang 1987, 688).

”The Helios theory and a holistic natural science reconcile natural sciences, humanities and social sciences.”

Holistic science, just like ancient Chinese philosophy, thinks that the life principle itself is the creative force, the ultimate source of changes creating new things. The same cosmic life principle is the fundamental principle of goodness. Since humans most fundamentally are living organisms, the universal fundamental principle of goodness is the universal fundamental principle of human behaviour. The same cosmic life principle unites matter, life and self-consciousness in the entire Universe, and provides all-embracing harmony. As the Helios theory has demonstrated, this cosmic life principle is the source and engine of solar activity. Developing a healthy, ecological civilisation is unconceivable without a school system built upon a healthy, ecological worldview.

THE CORRELATION BETWEEN SOLAR ACTIVITY AND THE CREATIVE FORCE OF MANKIND For a long time, it seemed impossible to prove by strictly scientific means the close relationship between the human mind and solar activity. Recently, however, a scientific breakthrough has come in this field. Suitbert Ertel, a psychology professor at University of Göttingen, conducted an analysis

of a huge database by means of mathematical statistics. Ertel’s work was inspired by one of the most significant anthropologists of his time, Alfred Kroeber, who, in his book Configurations of Culture Growth, published in 1944, wrote, “it is the frequent habit of societies to develop their cultures to their highest levels spasmodically”. In terms of Western civilisation, Kroeber’s most known “peaks in cultural creativity” include the Golden Ages of the Renaissance, the Baroque, the Rococo, and the Romanticism. Kroeber studied the time of outstanding works of painting, poetry, sculpture and science.

Ertel’s studies were aimed at analysing the data of painting, poetry and science.

Suitbert Ertel examined the works of 40,700 painters from Western civilisation. The data on the painters, compiled by Isabella Errera, a Belgian art historian, were obtained from 1,550 sources, taking the data of exhibitions, museums, the sales of paintings, catalogues, and other sources. Ertel found two waves of creativity in painting, one of the peaks emerged in 1645. He also examined poetry. Based on the extensive collection of data

by H. A. Frenzel and E. Frenzel, as well as in Bertelsmann’s Lexicodisc, a creativity peak occurred in poetry 10 years later, in 1655. After that, he compiled the Master Index of scientific discoveries, using 26 manuals, lexicons, encyclopaedias, biographies and textbooks om the history of science from 1440 to 1800. He found that scientific creativity culminated in 1670. All the three peaks, in 1645, 1655, and 1670, were significant, over the margins of tolerance, and all showed a sudden, at least double intensification of creativity. This was the age of rebirth, the Renaissance.

After that, he compared these data with the second largest similar collection of data, the Chinese one, for the same period. The outcome was surprising.

The Chinese data showed that the peaks of creativity in painting, poetry and science occurred exactly at the same time as in Europe: in painting, it was in 1645, in poetry it was in 1655 and in science it was in 1670. Ertel asked the question, “Is it possible for the creativity of civilisation to show several peaks of at least double intensity, all in a relatively short period of time, in all areas of culture? Furthermore, is it possible to happen simultaneously with the number of artists of an unknown civilisation, which is situated more than fifteen thousand kilometres away?”

Such a peculiar and multiple coincidence between European and Chinese data must have a common cause, and from a geophysical source, Ertel argues. Remarkably, he found a factor with which these peaks coincide – in solar activity. It is widely known that solar activity is cyclical, but it is not the same period that repeats. Solar activity has a period of 11.2 years on average. There are some solar cycles, however, that last for 14 years, and there are some that last for only 9 years. There are major irregularities in solar activity. One of the most significant irregularities is a sudden drop in the number of sunspots, which began in 1625. Solar activity almost completely stopped between 1645 and 1715. Astronomers regard this phenomenon an anomaly in the activity of the usually “well-behaving” Sun. This irregular lowactivity period is called Maunder minimum, named after Edward Walter Maunder, who discovered this phenomenon in 1898. The study of the origins and the nature of solar activity led us to the conclusion that the Sun is alive. Life is inseparable from the decision-making of living organisms. Decision-making, the self is the centre of conscience.

Thus, the living nature of the Sun also entails the conscious nature of the Sun. If solar activity is a vital activity, then it is also a conscious activity. Human creativity also manifests in conscious activities. The facts that show the coincidence of the extraordinary period of human creativity in the Renaissance and the extraordinary period of the Sun are firmly grounded, have great statistical significance, and are extremely reliable due to the high volumes of processed data.

These facts are rooted in psychology as well as in solar activity. These two fields are seemingly very distant, and their correlation and coincidence require explanation. What seems odd today might become clear tomorrow, with a better understanding of the relationships between the Sun and the Earth. Hopefully, the gaps in our knowledge about the nature of the effects exerted by the Sun will be filled, and we can discover their nature, and neurophysiological correlations. Ertel’s novel result, the accuracy and the methodological quality of the work he did was recognised by Hans Eysenck, one of the most prominent psychologists of the time.

If this entails another explosion of human creativity, the long-awaited New Renaissance can come.

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– Alternatives Developed for 2050… (Alternatívák a 2050-es évekre: A technikai fejlődés hatása a társadalomra - A 2050-re kialakított alternatívák...) In: Opus et Educatio, Volume 3 Issue No. 4 pp. 413-421. http://opuseteducatio.hu/index.php/opusHU/article/view/37/24 (17/01/2017) TYNAN, D (2016): Galactic Gold Rush: The Tech Companies Aiming to Make Space Mining a Reality. In: The Guardian, 6 December, 2016. https://www.theguardian.com/science/2016/dec/06/space-miningmoonasteroids-tech-companies (17/01/2017) WILSON, B (2011): Newspaper Will Cease to Exist by 2050, Data Shows. 28 November, 2011. http://bradleywilsononline.net/from-bradley/newspapers-willcease-to-exist-by-2050-data-shows (17/01/2017) World Economic Forum: Mining & Metals in a Sustainable World 2050. Industry Agenda. September 2015. http://www3.weforum.org/docs/WEF_MM_Sustainable_World_2050_report_2015.pdf (17/01/2017) WWF–Ecofys–OMA (2011): The Energy Report: 100% Renewable Energy by 2050. https://www.wwf.or.jp/ activities/lib/pdf_climate/green-energy/WWF_EnergyVisionReport.pdf (17/01/2017) Ricardo Hausmann: The growth and diffusion of knowhow Ricardo Hausmann hivatalos honlapja. http://ricardohausmann.com/?page_id=18

RSA éves konferencia statisztikái 2017, Dublin, Írország: The Great Regional Awakening: New Directions – Statistics http://www.regionalstudies .org/uploads/documents/Dublin_ Stats . pdf (2017.06.07.)

Hausmann, Hidalgo et al.: The Atlas of Economic Complexity – Mapping Paths to Prosperity. Puritan Press, New Hampshire, 2011. http://atlas.cid.harvard.edu/media/atlas/pdf/HarvardMIT_AtlasOfEconomicComplexity.pdf DAVID ROWAN The presentation is supported by Pageo in Pageo Club at March 2016.

GEOFUSION Presentation of Geofusion book by Mr Norbert Csizmadia - Budapest, 3rd November, 2016 PAIGEO – The New World Order Conference Summary of PAGEO: New World Order’s conference át Budapest, 29th November, 2017.

RSA éves konferencia 2017, Dublin, Írország: The Great Regional Awakening: New Directions. http:// w w w.regionalstudies .org/conferences/conference/rsa-dublin-2017 (2017.06.07.)

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CREDITS EDITOR-IN-CHIEF Norbert Csizmadia MANAGING EDITOR Anton Bendarzsevszkij EDITORIAL BOARD Ágnes Bernek Anton Bendarjevsky László Körtvélyesi Péter Szatmári György Szapáry István Szilágyi Ákos Vajas COPY EDITOR István Czene ART EDITORS Gyula Nagy Fülöp Kovács Zsófia Szabó PUBLISHED BY: Pallas Athéné Innovation and Geopolitical Foundation H-1013 Budapest, Döbrentei utca 2., Hungary

AUTHORS Albert László Barabási Ráhel Czirják Zoltán Cséfalvay Mihály Csíkszentmihályi Norbert Csizmadia Viktor Eszterhai Sára Farkas Niall Fergusson László Gere Parag Khanna Sándor Kopátsy Fanni Maráczi György Matolcsy Sugata Mitra Viktor Orbán Márton Péti Eszter Polyák Noah Raford David Rowan Géza Salamin Fruzsina Simigh Éva Szentirmai

DATE OF PUBLICATION March 2018

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HUG (Hungarian Geopolitics) is Hungary’s leading geopolitical magazine. Pallas Athene Innovation and Geopolitical Foundation (PAIGEO) aims to provide an opportunity for this value-creating discourse, which reveals the geopolitical, geostrategic and geo-economic networks of our age. Our authors are international experts, world-famous professors, and representatives of a new research generation and undertake the great challenge of interpreting the knowledge snippets that are scattered in the world, still, belong together.

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