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Panel Detail:
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The Global Economy
Wednesday, April 2, 2003
7:30 AM - 8:50 AM


General Session

Sponsored by News Corporation

Rupert Murdoch, Chairman and CEO of News Corporation, makes a point during the discussion about the challenges facing today's global economy. Listening is Donald Straszheim, Vice Chairman of the Milken Institute.

Speakers:

Robert Hormats, Vice Chairman, Goldman Sachs (International); Managing Director, Goldman, Sachs & Co.

Thomas Hughes, Global Head Asset Management; Member, of Group Executive Committee, Deutsche Bank

Rupert Murdoch, Chairman and CEO, News Corporation


Moderator:

Donald Straszheim, Vice Chairman, Milken Institute; Founder, Principal, Straszheim Global Advisors

Summary:

The pace of globalization continues to accelerate, but despite the new opportunities presented by the global economy, the United States still leads the way. Panelist Rupert Murdoch stated: "Any way you look at the world, you need U.S. leadership."

According to the panel, the world is witnessing a European economy that continues to wallow in bureaucracy, a Japanese economy that is laboring beneath structural rigidity and a Chinese economy looming with ever-present potential.

Europe and the expanding European Union possess great potential for taking advantage of global opportunity, yet they struggle to reduce unemployment and attract investment because of complex and rigid regulations. Robert Hormats voiced concern that Europe is regulating itself to a point of noncompetitiveness.

Eastern Europe, on the other hand, has a different attitude toward governmental regulation and identifies with the pitfalls of an overburdened, less competitive economy. The panel cautiously suggested that as the European Union expands eastward, the more competitive and less regulated Eastern European economies might influence their Western counterparts and in fact be a model for European deregulation.

Japan, which has struggled with its stagnant economy for over a decade, continues to show economic weakness. Foremost among Japan′s most pressing problems is its aging population and strict rules limiting immigration. The limits on human capital in Japan could mean grave consequences for its economic future.

Rupert Murdoch pointed out a silver lining for Japan noting that many Japanese companies are far better off than the Japanese economy. Despite Japan′s structural problems, many of its local companies manufacture products that continue to be in high demand around the world.

The Chinese economy continues to generate high interest. Its potential power is already attracting foreign direct investment in the region and siphoning off capital from the Asian Tigers and Japan.

China is not without its flaws. Transforming a nation of one billion people from a central planned economy to a market-based economy is a risky matter. Despite the economic success of certain Chinese cities in the east, much of the nation′s population still resides in the impoverished countryside. Distributing economic growth throughout the population might prove to be a formable challenge.

The panel concluded by reinforcing its belief that U.S. leadership prevails in the global economy. Despite the current short-term problems facing it, the U.S. economy continues to have the strongest infrastructure with the least amount of government regulation.

Summarizing the theme that pervaded the panel′s discussion, Thomas Hughes reminded everyone that in a global economy "capital will go to the place with the least amount of restrictions."

Background Info:
Global Perspectives: Sustaining Growth in an Interdependent World
2001 Global Conference: A Global Perspective
2000 Global Conference: Global Overview 2000
2000 Global Conference: Globalfinance.com
2001 Global Conference: Capitalizing on the Changing Global Financial Landscape
Capital Access Index: Financial Repression and Capital Access
Capital Access Index: Think Locally - Act Globally: Capital Market Restructuring and Sustainable Global Economic Growth
Promoting Global Financial Development: Vive La Difference!
Milken Institute Review: Institute View
Milken Institute Review: Book Review: Money Makes the World Go Round



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