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Program - By Regions Track:

Monday, April 23, 2007

  7:00 AM - 8:25 AM

Financing Regional Infrastructure in Israel

Speakers:
Ehud Danoch , Consul General, Consulate General of Israel, Los Angeles
Ron Dermer , Minister, Economic Affairs, Embassy of Israel, Washington, D.C.
Carl Kaplan , Managing Director, Koret Israel Economic Development Funds
Yaron Kestenbaum , CEO, Israel Infrastructure Fund
Glenn Yago , Director, Capital Studies, Milken Institute

Moderator:
David Pollock , Senior Managing Director, Bear Stearns & Co. Inc.

During the Second War with Lebanon in the summer of 2006, northern Israel in particular bore the brunt of devastation from missile strikes. But even before the war, explained panelist Carl Kaplan of the Koret Israel Economic Development Funds, the region has been economically disadvantaged due to a "lack of credit and lack of infrastructure," and an over-dependence on tourism.

Northern Israel requires a large influx of capital to construct badly needed infrastructure critical to better integrating the region into Israel's economy, the panelists agreed. Additionally, economic development is needed to support and attract new jobs and growth, while stemming the out-migration that is draining the region of its most important resource, human capital. Moderated by David Pollock of Bear Stearns & Co., the session focused on discussing solutions to these problems in the form of innovative financing programs.

Los Angeles-based Israeli Consul General Ehud Danoch discussed the "enormous potential in the north" and showcased the many technology companies thriving in the region. He stressed that despite past insecurity, Israel's economy is booming and has attracted significant amounts of foreign direct investment. Setting the context for the remainder of the session, he explained how Israel has been facing pressures of a growing population and economy, and the need to better integrate the north into the rest of the country.

Ron Dermer Israeli Embassy in Washington, D.C., expanded on Danoch's statements and explained that the apparent contradiction of war and political instability beside extraordinary economic growth was due the fact that "Israel has gotten its fiscal house in order" and benefits from productive and innovative human capital. Over the past several years, he said, the Israeli government has engaged in "reverse tax-and-spend" fiscal policies, dramatically cutting taxes and reducing spending while adopting policies to privatize state-owned enterprises, foster competition and facilitate more public-private partnerships. He highlighted the nation′s stable monetary policy; adding that since Alan Greenspan left the Federal Reserve, "Israel has the best-led central bank in the world."

Israeli companies and citizens hold more patents than India and Russia combined, he stated, and the country enjoys the highest venture capital per capita in the world. "We can compete," Dermer stated, within Israel and around the world. Unfortunately, there has been inadequate investment in critical infrastructure in the north, and there is a need to leverage VC and philanthropy to provide innovative financing for infrastructure investment and provide credit to small businesses.

Glenn Yago of the Milken Institute, noted that while 58 percent of Israel′s exports are from the technology sector, that figure represents only 7 percent of employment. Yago led a recent Milken Institute effort to identify innovative finance solutions to aid economic recovery and development in northern Israel and discussed the method of using "innovation labs," collaborative sessions that bring together financial experts and representatives of relevant foundations. Some possible solutions include: development of a bond authority for infrastructure and public-private projects; expansion of Koret Israel Economic Development Funds for small-business development; development of a northern Israel small-business collateralized loan obligation; and the use of the Chicago Climate Exchange offsets program to raise additional financing.

Kaplan discussed his program, supported by the Koret Family Foundation, to leverage bank financing with philanthropic donations. This program is seen as a model for Israel that many would like to see expanded significantly. The program operates a revolving loan fund that makes incentive loans, ranging from $10,000 to $500,000 to small businesses. According to Kaplan, the program has funded 1,200 loans, supporting more than 20,000 jobs.

Yaron Kestenbaum of the Israel Infrastructure Fund noted that Israel′s infrastructure is not keeping pace with its economic growth and that the nation is facing an electricity power deficit. The Israel Infrastructure Fund is looking to bring additional private capital into Israel to help finance large infrastructure projects and has so far attracted over $100 million. Promoting the fund as market-grade investment, Kestenbaum touted anticipated returns in the double digits with relatively low risk because of the government's support of these projects and innovative financing programs.

One example of the potential success of the programs is Israel's Highway 6, a privately funded toll-road project, financed by 10 percent equity and private debt. One reason for the project's success was a government guarantee for 80 percent of demand. Travel demand is near anticipated levels, and the debt was commoditized and has generated profits for the original investors.

Pollock summarized the session, noting that potential venture investors and philanthropies are likely to embrace the proposed solutions because the conditions in Israel are very favorable. The government is willing and supportive, there is highly educated and innovative available human capital, and there are existing programs already in place.

  10:15 AM - 11:30 AM

North American Competitiveness: United We Stand, Divided We Fall

Speakers:
Marie-Lucie Morin , Deputy Minister of International Trade, Foreign Affairs and International Trade Canada
Roberto Newell Garcia , CEO, Instituto Mexicano para la Competitividad, A.C.
Deborah Wince-Smith , President, Council on Competitiveness

Moderator:
Zanny Minton Beddoes , U.S. Economics Editor, The Economist

Competition is the principal driver that sustains relationships between people, between businesses and between countries. For the past 13 years, for example, Mexico, Canada and the United States have worked together through the North American Free Trade Agreement (NAFTA) -- and in doing so have asserted North America's regional competitiveness.

The three countries have benefited in varying degrees from NAFTA. The U.S. economy has prospered from the movement of goods and services across its borders to the north and south. Mexico, which nationalized a large portion of debt in the 1990s, is continuing to look for areas for growth and investment. Canada, too, has benefited, drawing a $13 billion-plus increase in exports since signing NAFTA.

While the three-country relationship has prospered these past 13 years, the world has notably changed. September 11 created a trade-off between economic stimuli and security concerns. The rise of India and China has changed the dynamics of manufacturing goods and delivering services. And surging demands for energy are creating new markets for sustainable growth and innovation.

The challenge of first sustaining and then improving North America's competitiveness in the face of these trends, was the focus of discussion by a diverse panel representing the United States, Canada and Mexico.

Moderator Zanny Minton Beddoes of The Economist asked panelists to identify the main deterrents for foreign direct investment in North America. Attracting FDI is somewhat tricky, as capital tends to flow to more unregulated markets, she noted.

Roberto Newell Garcia of Mexico para la Competitividad emphasized that regulation is a "change agent" to promote efficient cross-border integration. Multinational companies seek to optimize high-value investment where government regulations are lowest. Deborah Wince-Smith of the Council of Competitiveness cited the punitive federal payroll tax in Guadalajara as an example of deterring investment. Investors, she said, went where tax burdens were marginally less or nonexistent.

In the energy market, the Mexican constitution strictly regulates the country's most valuable commodity, oil. As it stands, only the government can explore and produce oil, the this monopoly dissuades foreign investment and deters foreign research into alternative sources, such as natural gas.

Beyond regulations, regional competitiveness is also dependent on the ability to swiftly and safely move people and goods across borders. Garcia discussed how the development of North America's cross-border infrastructure goes hand-in-hand with trade. Ideas were discussed to enhance the movement of goods in a safe and expeditious way. For example, synthesizing border inspection and technological equipment would reduce high border security costs. A deepwater port servicing the surge of trade along the Pacific Rim could be funded through a regional North American effort.

Innovative rail systems connecting ports to distribution centers and cross-border interstate highways require both government and private investment. This collaboration brings potential for North America to set the standard for international travel and global commerce.

With infrastructure development comes the need for energy to power it. The regional competitiveness for North America -- or any region, for that matter -- boils down to energy. Marie-Lucie Morin of Foreign Affairs and International Trade Canada described Canada as "an energy superpower." But even with large reserves and conservative long-term energy exploitation estimations, a major gap between supply and demand of fossil energy is expected by 2020.

With this energy gap comes ample opportunity. Innovation is the driving force in the U.S. economy; the Department of Energy is unleashing huge amounts of money on sustainable energy innovation. Of late, corn is the crop of conversation, as countries and business seek alternative energy sources. Deborah Wince-Smith from the Council of Competitiveness explained corn as a short-term solution, as opposed to other forms of cellulosic biofuels.

The energy balance of corn is poor because the energy exerted in processing ethanol is greater then the energy yield it produces. There is, however, enormous potential in sugar. And with Mexico being the largest producer of sugar in the region, North America has potential to further to diversify its energy sources.

"People live and create in communities," said Wince-Smith, "and these communities are connected throughout the world." The consolidated Americas have proved willing and able to effectively collaborate. For the most part, NAFTA has exemplified fruitful returns for all three countries. Where they go from here depends upon the coordinated effort to synchronize regulation and cross-border infrastructure in a system fueled by clean, sustainable energy.

  2:00 PM - 3:15 PM

China's Unanswered Question: Can It Succeed Without Political Reform?

Speakers:
Andy Rothman , China Macro Strategist, CLSA Asia-Pacific Markets, Shanghai
J. Stapleton Roy , Vice Chairman, Kissinger Associates Inc.; former U.S. Ambassador to China
Frank Sixt , Executive Director, Group Finance Director, Hutchison Whampoa Ltd.
Sean Wallace , Senior Managing Director, Asia Pacific, Darby Overseas Investments Ltd.

Moderator:
Graham Earnshaw , Editor-in-Chief, Xinhua Finance News

China has seen tremendous economic growth in the past three decades. With this history of successes, the question arises: Is China in need of political reform? Moderator, Graham Earnshaw of Xinhua Finance News kicked off the panel by asking, "Why would a country experiencing 10 percent annual growth over the past 30 years need to rethink political reform?"

Most panelists agreed while this was a very good economic track record, China would have to institute political changes to facilitate future success. But Andy Rothman of CLSA Asia-Pacific Markets suggested that the question wasn't whether political reform would occur. "The question," he said, "is what type of political reform."

The panelists agreed that even with China's economic success, the central government is not fully addressing key issues, primarily social issues that include lack of education, lack of health care and environmental concerns. Rothman noted that 85 percent of people in China don't have medical insurance and 50 percent of farmers can't afford a doctor. And Sean Wallace of Darby Overseas Investments pointed out that while education and health-care spending are growing at 18 percent a year, China lags behind international standards.

These were all examples of how the social safety net is not yet in place to sustain the growing society. Wallace noted this is causing a lack in consumer confidence and that people won't spend money until they feel secure. And the current social safety net certainly won't be adequate to help the country cope in the event of an economic downturn -- which at least one of the panelists, Rothman, believed was an eventual certainty.

J. Stapleton Roy of Kissinger Associates and a former ambassador to China, said he believed political change will come through the people and newer government leaders who are listening to them. Many of the future leaders will have been educated in the West, he noted. They will face the same problems that today's leaders face, but their responses will be different. He cited the recent passage of the Property Law, would not have happened just 10 years ago.

Frank Sixt of Hutchison Whampoa noted that the process of absorbing Hong Kong will drive mainland China to at least consider a more representative form of government. Other panelists agreed, though no one could predict how much representation the central government would concede. Roy pointed out that the challenge for China will be moving toward a more representative form of government without losing control, as had happened with Mikhail Gorbachev. Most panelists seemed to agree that change will not end in a Western-style democracy.

Sixt pointed out that some changes are already taking place. For example, Property Law, he said, protects individuals' interests, even against the state. And Mr. Rothman noted that home ownership has gone from 13 percent 10 years ago to around 70 percent today.

Sixt said he has had experience dealing with mainland China courts and gave them a "mixed report." The further away one is from the center of core policy, he said, the greater the risk of running into some level of corruption. And while the level of corruption is high, charges are being brought against even high-level officials. "China goes after big fish on corruption issues," he added, "and punishes severely."

Most of the panel agreed that while changes in the rule of law are necessary, the social issues are much more pressing. Wallace predicted that those changes will deal with privacy and individual rights, and that we will see very gradual changes not touted by the U.S. media. And the bigger change will be in China moving from a manufacturing to a consumer economy. As the safety net grows, people will feel more confident and invest more in real estate and putting money in savings accounts.

Everyone seemed to agree with the changing role of media, and the Internet in particular. Rothman and Sixt both pointed to the Internet as a way for news to reach the people. "The Internet is like water and will find a path (to the public)," said Sixt. However, both men emphasized that the path is not yet fully developed, and Rothman noted that while sports news and financial information are openly available, political news is still an issue and won't be available for quite a while.

  2:00 PM - 3:15 PM

Doing Business in Russia

Speakers:
Patricia Cloherty , Chairman and CEO, Delta Private Equity Partners LLC; Manager, U.S. Russia Investment Fund and Delta Russia Fund LP
Clemens Grafe , Co-Head, Europe, the Middle East and Africa, UBS
Giedrius Pukas , Executive Director, Chief Investment Officer, Troika Capital Partners
Andrey Vavilov , Chairman, Institute for Financial Studies; former First Deputy Minister of Finance, Russia

Moderator:
Elena Barmakova , Founder and Chairman of the Board, Fontvieille Capital Inc.

The panel opened with unanimous agreement that investment possibilities in Russia remain good, even excellent, over the long run. But panelists also expressed concern about the short-term prospects.

The Russian economy continues to grow, with more direct investments in the country, said Andrey Vavilov of Institute for Financial Studies. "Liquidity management policy is the key to success," he said. The current Stabilization Fund, or Stab Fund (previously known as Debt Fund) totals more than $100 billion, and the main problem is how to spend this money.

The application of liquidity management policy is one way to succeed, he said. Key features of such a system would include concentration on the long-term target, flexible risk management and global diversification. Another important step would be to make the Stab Fund an independent agency that would no longer fall under management of the Central Bank.

Vavilov acknowledged that most of the changes that have taken place in Russia over the past seven years were caused by the world rise of oil prices. But he noted that the Russian market is still very volatile and that Russia may be ready to accept lower prices for its oil. Meanwhile, the Russian financial system has grown dramatically and is nearing international standards. Remaining issues include the lack of an appropriate regulatory system and bureaucracy that affects both foreign and domestic investors. He concluded that the Russian market is attractive, but that investors must exercise caution.

Giedrius Pukas of Troika Capital Partners noted that careful investors will do very well in Russia, and that now is, in fact, a good time to build business. Russia is too big to be ignored, he said. Currently, the country is in the post-crisis stage, with new business owners focused on building value. Over the past four to five years, he added, Russia has been preparing to accept foreign investments. Today its priority should be on stabilizing the banking and finance sector. Russians need financing, which is currently hard to obtain from the banks. He concluded with the optimistic view of enormous growth in the private equity market.

Patricia Cloherty with Delta Private Equity Partners also expressed optimism about the future of the Russian economy. She suggested that investment opportunities in private equity are endless and said that her company has invested $500 million in 54 Russian companies, with primary focus on the consumer-oriented and media companies. Cloherty did caution that corruption remains a problem in some areas.

Clemens Grafe with Europe, the Middle East and Africa, UBS, agreed with the other panelists that investment opportunities abound in Russia, though he stressed that international expectations are too high. Russia has a huge and growing consumer market, largely due to rising oil prices. But the oil and gas sector is the slowest-growing sector of the economy, where the construction, mortgage and finance sectors, among others, are enjoying surges.

"We are positive in terms of investing in Russian banks," said Grafe, though he noted that risks remain because of poorly defined rules and regulations. He described a similar scenario for the energy sector.

The panelists concluded as they began, agreeing that Russia is a land of great investment opportunity but underscoring the need for knowledge and caution.

  3:25 PM - 4:40 PM

The Resurgence of European Investment

Speakers:
Graham Clempson , European Managing Partner, MidOcean Partners UK
John Ong , Managing Director and Global Head of High Yield, BNP Paribas
François Pagès , CEO, Calyon Securities

Moderator:
John Gapper , Associate Editor and Chief Business Commentator, Financial Times

This session discussed recent trends in European financial markets, with a focus on two headline tensions: that between European and U.S. markets, and those within Europe itself.

Moderator John Gapper, a Financial Times editor, began the discussion by asking the panel whether recent U.S. attempts to regulate financial markets, namely the 2002 Sarbanes-Oxley act, had been successful or a "shot in the foot."

Graham Clempson of MidOcean Partners UK, saw an inverse relationship between trends in Europe and the United States. He saw numerous virtues in the European financial system not found in the United States, including: self-regulation; self-policing; light-touch regulation; proportional risk and reward of legal systems. All these policies have come together, along with maturation of markets, to cement Europe as place where innovation and dynamic businesses are rewarded, he said. Although many innovations originated from the United States, Europe has been able to refine these innovations to produce a better model than the US original.

Francois Pages of Calyon Securities, however, argued that Europe, unlike America, was not good at marketing its own success. There was tremendous scepticism in the 1990s about Europe's ability to create a single currency. Yet a decade later, the impact has been fantastic, he said, and Europe is now enjoying the fruits of its monetary innovation. Today the euro's share of global currency is at the same level as the deutschmark's in the 1980s, and it is attracting investment from various central banks.

Although the United States has traditionally produced the innovators of new financial instruments, Europe is now winning market share. For example, the mushrooming of the derivatives market demonstrates European innovation not seen in America. A large driver of this has been the growth of human talent in Europe.

Clempson agreed that there was a genuine two-way flow of innovation between Europe and the United States, illustrated by securitization and sell/lease back, two techniques developed in Europe. A large driver of this innovation is the fact that Europe came of age in a different environment, characterized by the boom of hedge funds and private equity.

John Ong of BNP Paribas said that the euro had accelerated an existing trend of convergence between Europe and the United States in terms of structure and public markets. The story of the next decade is going to be to what extent the United States will fight back. It faces a number of self-imposed limitations, such as the criminalization of inaccurate financial statements, closed borders and restrictions on work visas, all of which detract from its attractiveness and will force it to respond to lighter regulatory environment in Europe.

The strengthening of the pound relative to the dollar is being driven by two factors: the latent pool of European institutional capital that has liberated itself; and the increase in U.S. investors investing in the euro. These factors have created a liquidity wall.

European companies face ongoing difficulties in expanding the United States. The biggest challenge is the initial cost of setting up beach-head businesses, the panellists agreed. Once that is achieved, however, scaling up is easier. The move from the U.S. to Europe is seen as easier. Clean technology is one example of an industry where Europe leads the United States. But in order for Europe to make progress, America has to move beyond rhetoric and make these technologies economically viable. Some element of subsidy is required.

The panel switched to a discussion of intra-European tensions, generally between Eastern and Western Europe. Clempson argued that Europe was still very much one capital market. The euro, he said, has dramatically changed way investors look at the European high-yield market, for example.

But Pages felt that Europe was both a developed and emerging market. When Eastern Europe opened economically in the 1990s, Western Europe had to absorb the shock as well. Further, the deregulation of emerging markets has been very slow, compared to the deregulation in the United States. Meanwhile, the euro zone is still adding states, and there could potentially be a doubling of the number of people using the currency. Companies need to be sensitive about differences between Eastern and Western Europe, Pages noted, and cannot afford to generalise about how whole industries work.

There was a general consensus that London remained the financial capital of Europe. Ong argued that Europe's financial markets have been developed on City of London model. There were threats that if London stayed out of Europe, it would be disaster. Yet London's openness and lack of regulation was a great success. A quarter of a million French citizens now live in London, citizens who could have contributed to Parisian growth. This was seen largely as a protest against heavy European regulation.

That said, financial centres and centers of excellence are taking root developing in other parts of Europe. Switzerland is known to be hub of private banking, and France is considered to lead in innovative derivatives. Clempson pointed out that London faces a constant challenge to find the right balance between light-touch self-regulation and the power to hold poor performers accountable. The cost of living and taxes in London are high, and such factors as these, Pages said, account for the results of a recent survey in which 70 percent of respondents felt Europe did provide an attractive investment environment.

  3:25 PM - 4:40 PM

China's Growing Energy Appetite: How Can It Meet Demand and Protect the Environment?

Speakers:
Elizabeth Economy , C.V. Starr Senior Fellow and Director of Asia Studies, Council on Foreign Relations
E. Patrick Jenevein III , President, Tang Energy Group Ltd.
Douglas Ogden , Executive Vice President, Energy Foundation; Director, China Sustainable Energy Program
Sin Just Wong , Chairman and CEO, SBI E2-Capital Asia Securities Ltd.

Moderator:
Perry Wong , Senior Managing Economist, Milken Institute

Those seeking to convey the magnitude of China's energy demand have no shortage of staggering statistics from which to draw. As related by the speakers today, China adds electric generating capacity approximately equivalent to the entire United Kingdom every year.

To meet its projected demand, China will likely add an average of about four 500-megawatt power plants every week for the next five years. And while energy statistics abound, so do those regarding environmental cost. Most of that new electricity will come from burning coal, which already leads to premature deaths from pollution numbering in the hundreds of thousands per year. China itself estimates economic losses from environmental degradation and pollution on the order of 10 percent of its GDP. There is no question this poses a challenge of tremendous proportions. To address a problem of this scale, says Douglas Ogden of the Energy Foundation, "It's not a question of 'do we tinker?' We′ve got to do some major leapfrog efforts."

What is to be done? The overriding theme emerging from the four panelists was that new incentive structures must be put in place, and via two primary avenues. First, there must be a price on pollution, says Patrick Jenevein of Tang Energy Group. Arguing that "profitability supports sustainability," Jenevein emphasized the importance of stable contracts and clear ownership of pollution costs as fundamentally important to bringing in clean technology from the private sector. "I'm green because I make money," he stated, but added, "I don′t build wind farms unless I have a contract to sell electricity."

Reinforcing the importance of monetary incentives, Sin Just Wong of SBI E2-Capital Asia Securities Limited, added, "In China ... money drives everything, and the reason why there is no concern for the environment is because there is not enough money there."

Second, the incentives must be realigned at the implementation level to emphasize environmental protection at least as much as economic growth. According to Ogden, while China's central government "gets it" regarding the need for clean and efficient energy, the real challenge is in changing what goes on at the local level. Indeed, Elizabeth Economy of the Council on Foreign Relations pointed out that "looking at any five-year plan (of the central government), one can always find grandiose targets. The targets are never met." This is largely due to corruption and perverse incentives at the local level. In particular, China's local leaders are highly motivated by desires for promotion, which most believe comes from demonstrating economic growth. This will need to change to also take into account environmental factors. Economy also emphasized that it must be accompanied by increased transparency and political reforms that allow true environmental costs to be known publicly, while holding decision-makers at the implementation level more accountable for avoiding environmental problems.

Sin Just Wong argued that there are some slowly emerging signs of hope regarding these changes. Some officials at the local level are now being told that "if you want a promotion, you′d better have a clean town." He claimed there are also signs that the press is gaining increasing freedom to report on environmental issues, though Economy asserted that the freedom is nowhere near complete or sufficient.

Another sign of hope is the tremendous potential for improving energy efficiency, which is the cleanest and usually cheapest method of meeting energy demand. Ogden cited the one case where officials were planning to build a new 350-megawatt power plant but were instead convinced to spend money on increasing efficiency in the region served. By focusing on the demand side, they were able to reduce total electricity requirements by over 350-megawatt at approximately 25 percent of the cost of building a new plant -- and, of course, no increase in pollution.

To close, moderator Perry Wong posed an apt summary question: Will China be able to supply energy to meet its demand, and will it be able to do so while protecting the environment? All were in agreement that the energy will be there, but most believed it would not be clean for some time. Though stated separately, Jenevein and Ogden together provided a concise statement of the only way the latter goal will be met: "It comes down to implementation and enforcement." And: "If you price pollution, it will protect the environment."

Tuesday, April 24, 2007

  6:30 AM - 7:45 AM

Vietnam: Opportunities for Cause-Related Investing and Effective Philanthropy in the New Asian Tiger

Speakers:
John Anner , Executive Director, East Meets West Foundation
Robert Davies , CEO, International Business Leaders Forum
Man Phan , Manager, Business Development, Carrier Johnson

Moderator:
Perry Wong , Senior Managing Economist, Milken Institute

What are the most effective ways to combine public investment with corporate and individual philanthropy to secure progress in a rapidly development country? In this panel, a group of experts in the field of large-scale philanthropy will focus on Vietnam as a case study in how to do just that. Members of the audience are invited to brainstorm with these experts to find ways to build effective philanthropy in these developing nations.

  7:55 AM - 9:15 AM

U.S. Overview: Not Too Hot, Not Too Cold?

Speakers:
Brian Fabbri , Chief U.S. Economist for North America, BNP Paribas
Angelo Mozilo , Chairman and CEO, Countrywide Financial Corporation
Peter Orszag , Director, Congressional Budget Office
Andrew Rosenfield , Managing Partner, Guggenheim Partners LLC; Founder, President and CEO, Leaf Group LLC

Moderator:
Steve Forbes , President and CEO, Forbes Inc.; Editor-in-Chief, Forbes

"Our long-term fiscal picture is not pretty." This somber view of the U.S. economy, uttered by Director Peter Orszag of the Congressional Budget Office, was not shared universally by other panelists, who presented contrasting views and perspectives. In the course of the session, they did, however, generally agree that the U.S. economy was steady, and would not be extremely vibrant or bleak in the near term. In fact, "not too hot, not too cold" appropriately captured what Americans can expect in the coming quarters, years, and decades.

The panelists also included a CEO of the largest U.S. mortgage company (Angelo Mozilo); an industrial economist/managing partner of a notable financial services firm (Andrew Rosenfield); a economist/banker (Brian Fabbri); a moderator Steve Forbes. Their unique viewpoints, such as how they framed the economy in terms micro versus macro factors or a long-term versus short-term considerations, produced varied accounts of what has occurred and what one can expect.

"The U.S. economy is entering into a serious correction period," warned Fabbri, stating that the economy would not return to the levels of GDP productivity it had experienced in previous years. Highlighting such harsh realities as the slumping of domestic assets prices, rising housing delinquencies, stricter regulations for lending, reduced investment in real estate, the decline in overall consumption, slowed consumer spending, a decline in housing starts and the fact that 20 percent of disposable personal income is going to debt services, Fabbri painted a grim outlook of slowed growth and economic hardship that Americans can expect in the near term.

"I hope it's true," Mozilo exclaimed after listening to Fabbri, "because that would cause the Federal Reserve to lower interest rates, which is always good for us!" This half-joking, half-serious remark underscored the fact that the health of the economy truly is in the eye of the beholder. Mozilo advised the audience that the housing market is not as bad as it may seem, projecting that only about 5 percent of domestic homeowners would enter into foreclosure. And although housing values continue to slip and people continue to leverage themselves, Mozilo noted that 81 percent of homeowners continue to make their payments on time.

"The bigger the gap that exists between people who own homes and those that don't and can't, the bigger the social problems will be," stated Mozilo. The fact that so many Americans now own their own homes is indicative of the strength of the U.S. economy, he maintained but added that Congress has tightened restrictions and regulations that have "changed the rules in the middle of the game" for homeowners and may have drastic effects in the long term.

Speaking on behalf of the Congressional Budget Office and putting Mozilo's comments into a macroeconomic perspective, Orszag asserted that "the biggest thing we need to fear from the housing sector is that it may spread fear itself," and that the housing sector will not affect the greater economy significantly unless people lose consumer confidence. Orszag agreed with Fabbri that GDP growth likely will slow to around 2 percent but predicted that the country will avoid a complete recession. He attributed this economic slowdown to rising health-care costs.

"The biggest long-term fiscal problem we face," he said, "is health care, not aging." Currently the United States spends 4.5 percent of GDP on Medicare and Medicaid costs. Unless these costs are reined in, by 2020, he warned, that number will rise to 20 percent, which would be larger than the entire current federal budget. Orszag was optimistic that the country can achieve this, assuring the audience that "there is a variety of evidence suggesting we can take costs out of the (health-care) equation without impairing the health of Americans."

Presenting a brighter view of the fiscal outlook, Rosenfield argued that the United States currently maintains a staggering $678 trillion in capital stock, $600 trillion of which is human capital that has yet to be fulfilled. He added that growth is driven by scalability of human capital, an asset that the nation is rich in. "Our investment in higher education dwarfs other countries," he said, and he urged the panelists and audience not to view the economy in terms of the next few quarters, but rather in the next few years and decades. Looking over 20 or 30, he predicted, GDP growth will be above 3 percent, driven by technology and human knowledge. "Knowledge," he added, "is a non-rival, non-excludable good. It spreads widely."

However, moderator Forbes wondered whether 2 percent to 3 percent growth was even adequate, considering that China's economy is growing at 10 percent to 11 percent annual, and with India not far behind. Fabbri shared his concern, adding that the U.S. trade deficit has reached a staggering 6 percent and warning that "we slow down and they keep growing, and when that happens, there will be a shift in asset investment away from U.S." Orszag concurred, saying, "It is very unusual for the world's largest economic power to be in this position."

Despite all these weaknesses, Forbes reassured the audience of U.S. economic strength, speaking specifically to the impressive $28 trillion of net assets that exist on the nationwide, aggregated personal balance sheets.

With impressive numbers like these, Forbes asked, "Why is the mood in the U.S. so somber and sour?" Panelist answers included the Iraq war, income inequality, lack of social safety nets and health care and the looming presence of the Asian tigers.

So how hot or cold is the U.S. economy? As this panel illustrated, it depends who you ask. Regardless of the actual temperature of the U.S. economy, Forbes left the audience with a calming piece of advice: "Eventually we get through these things and we are stronger for it."

  9:25 AM - 10:40 AM

Global Risk in an Interdependent World

Speakers:
Richard Haass , President, Council on Foreign Relations
George Hoguet , Global Investment Strategist, Senior Portfolio Manager, State Street Global Advisors
Kenneth Knight Jr. , National Intelligence Officer for Warning, National Intelligence Council
Jami Miscik , Global Head of Sovereign Risk, Lehman Brothers

Moderator:
Joel Kurtzman , Senior Fellow, Milken Institute; Executive Director, SAVE; Senior Advisor, Knowledge Universe

Much attention is given to low-frequency risk from natural disasters, financial crises, major terrorist attacks and so on that have large impacts. Moderator Joel Kurtzman of Knowledge Universe and the Milken Institute argued that global investors should be "more concerned about high-frequency, low-impact risks" that systemically affect the governments and economies of many emerging markets. These kinds of risk come from corruption, lack of transparency and poorly defined property rights. A better understanding of the systemic risks in an increasingly interdependent world is important, Kurtzman said, because "many high-risk countries have huge opportunity."

According to Jami Miscik of Lehman Brothers, "in the financial world, people are risk-takers." But they need to understand how geopolitical trends and issues can affect markets and financial flows so that "risks are taken smartly." George Hoguet of State Street Global Advisors noted that many investors do account for risk in asset prices, but that there does exist a great deal of uncertainty and ignorance.

The panelists discussed a broad range of specific risk, ranging from volatility in oil and natural gas prices to terrorism to avian flu, but they also provided examples of regional conflict or internal political instability that can cause or exacerbate risk. In a more interconnected world, they agreed, regional risks have larger consequences.

Kurtzman noted that 41 percent of global oil production comes from unstable regions of the world and that spikes in the prices of oil and natural gas are driven by specific events in the Middle East and elsewhere. Hoguet added that regional crises in the Middle East affecting the supply of oil are "biggest risks I'm concerned about." Kenneth Knight Jr. of the National Intelligence Council commented that oil prices are more likely to go "up and up, rather than down," and that, in addition the Middle East, political instability or other events in Nigeria, Bolivia or Venezuela could trigger spikes in oil prices. "Nigeria is one that's very troubling," he remarked of the important oil-producing nation, which could suffer a possible political crisis in the wake of recent electoral controversy. Miscik raised the importance of Russia′s natural gas exports to Europe, as well as the Kremlin's use of its resources as a foreign policy tool, and warned that political instability during transition could have far-reaching implications for Europe's energy supply and global energy prices.

"Terrorism is like disease," stated Richard Haass of the Council on Foreign Relations. We can fight it but never completely eradicate it. Hoguet added that up to this point, asset prices haven't been affected dramatically by terrorism, but "what would fundamentally change perceptions would be four or five 9/11s in one year." Haass disagreed, saying that he was much more concerned about the small acts of terrorism, which are cheaper, harder to detect and require fewer resources. Miscik noted that while terrorists' intentions have not been diminished, their capabilities have been.

Avian influenza was a major theme during last year's Global Conference; so why, asked Kurtzman, had the topic disappeared from the public forum? Haass responded that avian flu remains a great risk, and while "it will happen at some point, we don't know the lethality." People no longer talk about it because there is no new information about the potential lethality or timing. Unfortunately, he added, what is newsworthy is "how little is being done to prepare for it." Not nearly enough has been done to establish quarantine procedures or international codes of conduct, and he predicted that a "first wave will wash over with whatever consequences that it will have" and then governments will take stronger actions. Hoguet added that ultimately "the way governments deal with it will be a major signal to the market" about the larger financial and economic impacts from avian flu. If the response is orderly and controlled, then the markets will be much less concerned than if there is what Miscik called "political bad behavior" by politicians whose natural political instinct will be to cover up initial outbreaks.

A number of high-profile risks were of less concern to the panel. Echoing the other panelists, Hoguet said he not worried about the imbalance of trade between the United States and China, predicting that the imbalance "will work off over time." The panelists were also generally unconcerned about regional conflict in Asia because, as Haass said, "China needs global and regional stability." Underlining how far geopolitical risk has evolved over the past 20 years, the panelists were unanimous in expressing that one risk "not keeping them up at night" was conflict between great powers.

  9:25 AM - 10:40 AM

How Can We Really Help the World's Poor?

Speakers:
Gerard Caprio Jr. , Professor of Economics, Chair, Center for Development Economics, Williams College
Jacqueline Novogratz , CEO, Acumen Fund
Sally Osberg , President and CEO, Skoll Foundation
Zachary Pessin , President and CEO, Distributed Capital Group

Moderator:
Betsy Zeidman , Director, Center for Emerging Domestic Markets, Research Fellow, Milken Institute

Nearly 40 percent of the world's population -- 2.5 billion people -- lives on less than $2 a day, despite years of effort and multitudes of funds expended by governments, foundations and individuals trying to solve the problem. But is donor-supported aid the answer?

In an opening discussion of the definition of "social entrepreneurs," Jacqueline Novogratz of the Acumen Fund added that charity doesn't really solve problems in developing nations; helping entrepreneurs is a real driver for change in those emerging economies.

Professor Gerard Caprio Jr. of Williams College, explained that people forget that when countries have good incentive systems for their citizens to invest in their own futures, they don't need foreign aid —- on the other hand, nations without good incentive systems won't be able to put the foreign aid they receive to good use.

Poverty, added Zachary Pessin of Distributed Capital Group, is "a huge sign of inefficiency -- we are not leveraging human capital." Empowering individuals to create small and medium businesses is a significant driver of change.

Novogratz reminded the panel not to forget that the poor often also have unmet basic needs, such as access to water, and that corrupt governments and syndicates that control business operations prevent outsiders from competing.

Caprio pointed out that even in countries with good microfinance institutions, the reach is very small, at less than 5 percent of the target population. This suggests that financial systems in developing countries are not inclusive of the poor or that banking costs price the poor out. Pessin added that financial markets in developing nations tend to make their loans on 100 percent collateral, problematic for the creation of companies. Unless loans are risk-based, he said, the capital will not get to the entrepreneurs. The problem seems even deeper, according to Novogratz, because many of the world′s poor put their savings in the very banks that will not lend them money. Caprio noted that many people break out of poverty, only to fall back into it due to economic fluctuations.

While aid to developing countries is important, said Pessin, there must also be accountability. "We cannot simply write these countries a blank check," he said. On the topic of economic sustainability, Osberg offered the following example: In 1997 the World Wide Fund for Nature (formerly the World Wildlife Fund) and Unilever created the Marine Stewardship Council to certify fisheries for sustainable fishing. Its main objective is to safeguard the ocean's fish stock from depletion, which would make the business unsustainable. This is an example of a partnership in the right direction, she said, "but for this to be successful It will take governments, businesses and NGO′s to make it happen." This is the way jobs are created, she said.

  9:25 AM - 10:40 AM

Rebuilding the World Trade Center

Speaker:
Larry Silverstein , President and CEO, Silverstein Properties

On July 24, 2001, real estate investor Larry Silverstein was awarded the bid to lease the World Trade Center in New York City. Seven weeks later, the buildings were destroyed when two jetliners that had been hijacked by terrorists crashed into them.

Realizing that a symbol of hope was needed in those desperate times after 9/11, Silverstein and his team started planning to rebuild. Aside from the tragic loss of lives, 9/11 was also a devastating blow to the city's and the region's economies, he said.

Silverstein pointed to an estimated annual economic impact of $15 billion to the region with the reconstruction, including 100,000 jobs that will be connected to the project. Of course, this comes at a price: the investment in the towers, a memorial and expansion of a mass transit hub add up to $20 billion -- money pooled from public and private sources.

The new buildings are "designed to embody everything we learned in 9/11," said Silverstein. Apart from finding David Childs, the man behind the Freedom Tower, Silverstein and his wife traveled the world to find the right architects for the project. Three of the world's best were chosen, all of them Pritzker Architecture Prize winners: Richard Rogers and Sir Norman Foster of the UK, and Fumihiko Maki of Japan.

Of the Freedom Tower, he said that "this building is designed to withstand anything." An explosion specialist from Israel was consulted in the design. But safety is not the only field in which the Freedom Tower is state of the art. It is also a worldwide leader in environmental-friendly construction, technology and sustainable design. Rainwater will be stored and used to cool the buildings as well as irrigate the memorial park, for instance. "Notwithstanding my name," he said to audience laughter, "we won the Gold Standard (for energy-efficiency rating), which I think is pretty terrific."

The three towers planned thus far are drifting down in size. The tallest structure, the Freedom Tower, will stand 13,038 feet tall, the same height as the original towers. This will extend to 1,776 feet when one includes the antenna. "It will be the world's tallest building for about ten minutes," joked Silverstein, adding that a developer in Dubai is planning a larger structure in the near future.

Sir Norman Foster is the architect behind Tower No. 2. It has a distinct cant that defers to the memorial site below. The trading floors, Silverstein noted, are among "the most efficient trading floors you can ever find."

Richard Rogers designed Tower No. 3. Its theme is "lots of space, lots of grandeur," structural support on the outside of the building that provides for modern design and no column obstruction inside for a maximum usage of space. Tower No. 4, the Maki building, will be "simplistic in its design ... but exquisite in its simplicity," said Silverstein. The concept involves "enormous transparence, enormous amounts of light."

Different political player exerted massive amounts of pressure and had different agendas in the planning process. Political dynamics changed during the presidential campaigns in 2004 and the mayoral campaigns shortly thereafter. Silverstein emphasized that "negotiating with one (political player) ... was totally inefficient." Instead, he argued, different parties had to be brought together. All viewpoints were considered, and the final product is a compromise that reflects different preferences. "It took us a long time to get there but we finally got it."

The project is expected to be finished by 2011. It aims to augment the recent developments in downtown Manhattan that have resulted in more residential and retail neighborhoods. The rebuilding has by no means been an easy process so far -- it took five and a half years to get everybody on board. And it will likely continue to be a rocky road, said Silverstein, but "if you keep your eye on the goal and if you are determined, you can reach your mission."

  10:50 am - 12:05 PM

Investing in Emerging Markets

Speakers:
Christopher Ailman , Chief Investment Officer, California State Teachers' Retirement System (CalSTRS)
Mark Farrington , Managing Director, Head of Currency Management, Principal Global Investors
Caleb Fundanga , Governor, Bank of Zambia
Ronald Peyton , Chairman and CEO, Callan Associates Inc.
Steven Schoenfeld , Chief Investment Officer, Global Quantitative Management, Northern Trust Global Investments

Moderator:
Glenn Yago , Director, Capital Studies, Milken Institute

In the ongoing search for investment returns, emerging markets offer real opportunity. Yet they also pose challenges such as such as limited access to markets, immature legal and regulatory systems, political and currency risks, and enormous volatility. In March, these markets experienced declines that were second only to the August 1998 Long Term Capital Management crisis and the Russian debt default. What does the future hold? Could "contagion" return to emerging markets? Can risks be mitigated with innovative financial instruments? Panelists will discuss their visions for these markets and how financial technology could help hedge risks and produce both financial returns to capital and social benefits to the community.

  10:50 AM - 12:05 PM

Technology Innovation: The Key to Japan's Competitive Advantage?

Speakers:
Ryosuke Hata , Managing Executive Officer, Sumitomo Electric
Ben Knight , Vice President, Automotive Engineering, Research and Development, Honda Americas
Shinichiro Yahiro , Associate Vice President, Solar Energy Solutions Group, Sharp Electronics Corporation
Hideki Yamawaki , Professor of Management, Associate Dean, Peter F. Drucker and Masatoshi Ito Graduate School of Management, Claremont Graduate University

Moderator:
Woodrow Clark II , Senior Fellow, Milken Institute; Founder, Clark Strategic Partners

Now that Japan has begun to rebound from recession, what will drive its competitiveness in the near future? Leading Japanese companies, the same ones that led the past two decades of growth, are staking their futures on technology innovation around environmentally friendly products and services.

Japanese companies "have to incorporate global social values to be competitive in the future," said Hideki Yamawaki, Associate Dean of Claremont Graduate School and a professor of management. All of the companies represented on the panel -- Sharp, Sumitomo Electric and Honda -- seem to recognize that fact. "Increasing energy consumption produces massive environmental conditions," said Ryosuke Hata of Sumitomo Electric.

Not surprisingly, these same companies have also been innovators around technology-friendly products for a long time, in some cases decades. In fact, this "revolution" is just the next stage of evolution in Japan's economic growth, said Professor Yamawaki. In the 1950s and 1960s, the Japanese automotive industry responded to demand and capital constraints by inventing lean production. Then, in the export-led 1960s and 1970s, the industry responded to domestic and U.S. regulatory constraints by developing reliable compact cars. Now, in general, Japanese companies are responding to demographic and environmental constraints by spearheading new ways to both conserve energy and create sustainable energy.

The potential commercial, residential and industrial applications of environmentally friendly technology to products and services are numerous, said Shinichiro Yahiro of Sharp Electronics Corp. They also include so-called "off-the-grid" applications, such as remote housing and irrigation systems. Each panelist presented multiple examples of applications by his company across these categories.

Honda was the first company to introduce a hybrid automobile, in 2000, 20 years ahead of what had been forecast. Now the company is striving to create a zero-emissions vehicle based on alternative fuel sources, such as hydrogen power. As for skeptics who question the safety of smaller cars, Ben Knight of Honda Americas noted that small cars can be both safe and fuel-efficient. In fact, the Honda Civic hybrid is "in the lower half of cars in terms of fatalities in the U.S.," he noted. Moreover, Honda is on the verge of introducing the HondaJet, a private-use aircraft that will produce 30 percent to 35 percent less emission than comparable aircraft.

At Sumitomo, the vision of the GENESIS Project is to power the world via a network of solar panels located in deserts and connected by super-conducting wires. It may sound like fantasy, but the "door is open for mass-producing super-conductive cable" that has no electrical resistance, Hata said. To illustrate his point, he described Sumitomo's ongoing solar project with Albany, N.Y., to provide electricity to tens of thousands of households. To Hata, the idea is remarkable but also very old: "Human being were born and raised under the sun," he said, "and have relied on solar energy forever."

Yahiro explained that Sharp was one of the first companies to enter the solar energy market. And this emerging opportunity to develop environmentally friendly products "is the next pillar for our growth." Sharp has already installed 350,000 solar power units in homes across Japan, and in the United States, the company implemented a solar power system for Fedex in 2004 that meets 60 percent of peak demand for Fedex's Oakland distribution hub.

However, there are many obstacles to success, not the least of which is spurring demand for environmentally friendly products and services. As Knight said, it is "a chicken-and-the egg conundrum." Japanese companies must create products that consumers want in order to fund investments in infrastructure, but they must develop the infrastructure in order to create attractive new products.

  10:50 AM - 12:05 PM

Rebuilding New Orleans

Speakers:
Sean Cummings , President, Ekistics Inc.
John Kallenborn , President, New Orleans Region, JPMorgan Chase Bank, North America
Mitch Landrieu , Lieutenant Governor, Louisiana
Andrew Young , Co-Founding Principal and Chairman, GoodWorks International; former U.S. Ambassador to the United Nations

Moderator:
Scott Cowen , President, Tulane University

"Most of what we read in the press regarding the present state and future of New Orleans is negative," said Tulane President Scott Cowen as he opened the panel. "We are living a case study right now of rebuilding an urban city after the worst natural disaster this country has ever seen."

However, he added, there are also a lot of positive changes under way, and many opportunities. In fact, said Cowen, "Everything discussed here (at Global Conference) can be applied to the rebuilding of New Orleans."

Given those words, the panel of experts addressed what was going right in New Orleans and what still needs attention. Lt. Governor Mitch Landrieu tackled two primary myths about the area's damage. First, he said, Hurricane Katrina did not cause most of the city's devastation. On the contrary, most of the damage resulted when the levees broke. Had those levees been built strong enough to handle a hurricane above a category 3, the city would have been spared a great amount of destruction.

Second, Landrieu said, the issues New Orleans is currently dealing with are not unique to the city. What Americans saw on the ground -- poverty, racism, urban sprawl -- is happening across the country. The hurricane just brought national scrutiny to problems the public typically ignores, but which are in dire need of addressing.

John Kallenborn of JPMorgan Chase Bank explained that $40 billion has been put back into the New Orleans economy from insurance settlements; per capita income is up from 2006; unemployment is the lowest it has been, at 3.8 percent; and 80 percent of businesses are doing the same as before Katrina, 6.9 percent are doing better, and 6.4 percent are doing worse. "Surprisingly," said Kallenborn, "business is pretty good."

But more areas than not continue to need help -- including the levees, the Delta wetlands and a comprehensive approach to housing, education and jobs. However, the most vital problem -- and the most crucial component to solving the problems -- remains federal involvement, and state and local government alignment.

Current levee standards can only handle a category 3 hurricane, and Louisiana must invest in development and infrastructure that protect against the worst-case scenario. The panelists noted that the engineering exists to solve the levee challenges, but that no city can realistically be expected to finance construction of such a massive state-of-the-art levee system. As for wetlands protection, Landrieu said that an area the size of a football field is lost to the gulf every 30 minutes. He estimated that it will cost approximately $35 billion to secure and protect the deteriorating wetlands, which protect the river, the city and the region.

The panelists agreed that determining priorities -- jobs, housing, schools or infrastructure -- was complexl they are, after all, inextricably linked. While one might expect that a recovery master plan exists, the reality is somewhat more dismal. Only one of three phases has been completed, and it covers just the first five years post-Katrina. Moreover, it was prepared by someone who reports to the mayor's office. No long-term plan exists that has the buy-in at all levels.

Panelists insisted that the federal government must intervene to address all these issues and provide a master plan comparable in size and magnitude to the New Deal or Marshall Plan. According to Andrew Young, former U.S. ambassador to the United Nations and current chairman of GoodWorks International, it is not just the future of New Orleans at stake, but the future of the Mississippi Valley, which ultimately serves the entire nation.

All panelists expressed optimism about the future of New Orleans. Sean Cummings of Ekistics Inc., charged with developing a strip of land on the city's waterfront, detailed a number of opportunities for private-public partnerships to enhance and contribute to the restoration of the area′s cultural vibrancy, including culinary colleges, opera houses, museums and other developments.

The panelists also stated that race did not play a role in the post-Katrina disaster; the destruction hit white neighborhoods just as heavily as it did African American neighborhoods. Making the tragedy a "race issue," they asserted, has detracted from what is most important. But it does offer the opportunity to discuss the implications of making issues race-based, rather than political or economic.

The biggest opportunity of all will be for the 2008 presidential candidates, they noted. "Not one candidate has mentioned a plan for the reconstruction of New Orleans," said Ambassador Young, who predicted that the candidate who offers a long-term vision for the Mississippi Valley will be elected president. And he recommended that other states take time now to address their own issues of poverty, racism, health care and disaster-preparedness, all of which were pre-Katrina issues in New Orleans. Do it now, he said, to be better prepared during whatever catastrophes may come.

  12:15 pm - 2:00 PM

Lunch Panel
Global Overview

Introduction By:
Michael Klowden, President and CEO, Milken Institute

Speakers:
Gary Becker , Nobel Laureate, Economic Sciences, 1992; University Professor of Economics and Sociology, University of Chicago; FasterCures Board Member
Guy Laffineur , Global Head of Fixed Income, Head of London Capital Markets, Calyon
Rupert Murdoch , Chairman and CEO, News Corporation
David Rubenstein , Managing Director, The Carlyle Group

Moderator:
Paul Gigot , Editorial Page Editor, The Wall Street Journal

Despite healthy growth in 2006, the global economy still faces many challenges, including the complexity of global trade and financial integration, poverty, nuclear proliferation, energy and climate change. How will the global economy cope with these risks and opportunities? How should investors and corporations deal with excess liquidity and low inflation environment? Where are the highest risks and potential rewards to be found? Where will the highest growth be? Can China's growth continue with the appreciation of the yuan? What is the impact of the emergence of India on global prosperity?

  2:10 PM - 3:25 PM

China's Investment Climate: Riding the Second Wave

Speakers:
Jonathan Anderson , Managing Director, Asia-Pacific Economics, UBS
Timothy Dattels , Partner, TPG Capital
David Rubenstein , Managing Director, The Carlyle Group
Shelly Singhal , Founder and CEO, SBI Group

Moderator:
Henny Sender , Senior Special Writer, The Wall Street Journal

China's remarkable economic growth over the past decade has ushered in a paradigm shift in its investment climate, and trends, challenges and opportunities were the subject of this panel. Despite three popular myths about China's economy, they concluded, China remains an attractive investment destination. The key is to maintain a long-term outlook and to exercise patience.

Three misconceptions about China's economy plague many observers, distorting the picture of the country's investment climate. The first is that China's economy is about to crash and burn. Jonathan Anderson of UBS noted that although the economy is overheating in some sectors, people are still making a lot of money, and that there is not a massive wave of overinvestment.

Myth No. 2 is that opportunities to invest in China's export-driven economy, supported by cheap labor, are drying up because of rising labor costs. Anderson dispelled this misconception by noting that most Chinese companies serve a growing and long-term domestic market. Myth No. 3 concerns a supposed backlash building against foreign investment. David Rubenstein of The Carlyle Group asserted that this is not the case. The only significant barrier to foreign investment, he said, consists of restrictions on investing large stakes in state-owned enterprises, and taking them private.

Rubenstein captured the need for a long-term outlook by noting, "Bismarck famously said that there are two things you don't want to see being made. One was legislation, the other was sausage. Maybe he would have added 'pre-IPO' (basically, quick-profit) deals."

The Chinese don't wake up every morning thinking how they can make U.S. investment firms rich, added Rubenstein. Instead, China, which suffers no shortage of funds, hopes to gain foreign technology and other expertise through foreign investments. Investors who seek to make quick profits will probably be less successful than those with a long-term outlook. He noted that private equity investors, tending to stay invested even during downturns, can achieve better rates of return once the economy rebounds.

Two long-term challenges China faces present investment opportunities. Anderson noted that the demographic changes brought about by its one-child policy, and the resulting possibility of not being able to finance pensions for China's aging population, pose significant challenges to economic growth.

From an investment standpoint, China's consumption pattern is an "investment holy grail," said Timothy Dattels of TPG Capital. The rising consumption of automobiles is an example of the huge growth potential in certain sectors of the economy.

Dattels and Rubenstein suggested that "green investment," to finance solutions to China's serious environmental problems, will be another huge growth opportunity. With regard to mitigating China's environmental problems, Shelly Singhal of SBI Group added that China is capable of quickly mandating change in environmental standards without much debate. Rubenstein summarized by noting that the best investment targets are in companies that provide goods and services for the domestic Chinese market. Financial services, health care and consumer durables bode well for long-term growth.

In addition to serving as a destination for foreign investment, China is also investing abroad as its economy matures. The Lenovo deal, where the Chinese firm Lenovo bought out IBM's personal computing division, serves as a harbinger of a future trend. Excess liquidity in China also serves as motivation for outward investment from China. With almost $4.5 trillion of liquidity sitting in Chinese banks -- earning low rates of return -- China is destined to become a huge exporter of capital in the next 10-20 years. The United States should be prepared for such flows of capital coming in from China, and not react, as during the CNOOC-UNOCAL deal, as if the "Red Army were about to invade Los Angeles," quipped Rubenstein.

The panelists concluded the discussion by noting that despite China's attractiveness as an investment destination in the years to come, macroeconomic and political pressures should not be forgotten. It will be important to watch how China manages its transition from being a low-cost producer of goods to a high-value manufacturing and services economy. Problems such as environmental issues and rising inequality will exert both political and economic stress on the country′s future. As its economy grows, its leaders' penchant for exerting a more dominant political role on the world stage may also have long-term effects on its investment climate.

  3:35 PM - 4:50 PM

Latin America: Building a Bridge to the Middle Class

Speakers:
Guillermo Babatz , CEO, Sociedad Hipotecaria Federal
Miguel Kiguel , Director, EconViews
Luis Largman , Chief Financial Officer and Investor Relations Officer, Cyrela Brazil Realty S.A. Empreendimentos e Participações
Thomas "Mack" McLarty , President, Kissinger McLarty Associates; former Chief of Staff, Clinton Administration

Moderator:
Martin Guyot , Director of Emerging Markets Trading, Stark Investments

"Latin America has not even been mentioned in previous panels today," announced moderator Martin Guyot of Stark Investments. "Either people don′t know about the countries, or there are no opportunities." Of course, he added, "there are a lot of opportunities in Latin America." The regional economies are growing very fast and inflation is low." For example, he said, "It is mind-boggling how the currencies have appreciated, especially Mexico."

The classification of G7 and emerging markets is converging, and a good example is Brazil," he continued. "The mortgage market is really changing the investment market in emerging economies."

The 1994 economic crisis in Mexico, in which the peso suffered a sudden devaluation, seemed very far away for Latin America, but it basically destroyed the financial system in Mexico, explained Guillermo Babatz of Mexico's Sociedad Hipotecaria Federal (SHF), a state-run mortgage lender. "It took very hard macro-measures to get stabilization going again," he added, and credit didn't pick up until 2002. Now, he added, "we have a very healthy financial sector in Mexico, and mortgages are growing 30 percent each year." The biggest lesson from the crisis, he said, is to be patient because it takes time to have credit flowing into a country again.

The crisis in Argentina in 2002 was the worst of a series of crisis in the 1980s and 1990s, said Miguel Kiguel of Econviews. "It involved a sea change in the way the economy worked, moving from a fixed rate to a flowing exchange rate. ... Deposits fell from 30 percent of GDP to 20 percent of GDP, eliminating long-term credit." It will take a long time in Argentina to rebuild the credit market, he added. "The big obstacle in the development of the mortgage market is the lack of stability."

During the past 10 years, Brazil's president, Luiz Inacio Lula da Silva, has been a great surprise with his market-oriented reforms, said Guyot. "In Brazil we are living in a Second Life game -- we have had to invent everything in the last few years." Interest rates are decreasing, from 23 percent in 2003 to 15 percent in 2006, thanks to the stabilization plan the government has imposed. Wealth is extremely concentrated, which "leads to a lot of opportunities in the high and medium economic sectors."

"Issues of division are a hot topic in Latin America in the past years -- we see Mexico, Colombia and Chile on one side and Venezuela and Bolivia in another," continued Guyot, switching to a discussion of politics. Thomas "Mack" McLarty noted the number of close elections taking place in Latin America. "There is a very clear divide regarding the United States," he said, adding that the Iraq war has been a very big negative in terms of relationships, lessening the focus of the administration on the region. "The elections are very mixed today. Mexico's president, moderately conservative, is doing a great job. Even in Peru, there is an anti-Chavez result with (President) Alan Garcia." In general, he said, the public has a higher ownership in the election systems, even with corruption issues. "There have been very seamless transfers of power from one party to the other, which is a great thing for the region -- even the U.S. could learn of these."

The mortgage market in Mexico "has been growing quickly in the past five to six years," said Babatz, at around a yearly 27.3 percent growth. All the lending before was financed by the SHF. However, "the growth in the system comes from other sources of finance, making it self-sustainable. ... And delinquent portfolios are relatively low, people pay on time." Today, the lending market is robust, but still pretty small for the size of Mexico. "We need to watch out," Babatz warned. "With this kind of growth rate, you need a lot of regulation in the system."

Of the Argentinean mortgage market, Kiguel noted that the size of mortgage market in the 1990s was 4 percent of GDP, and "they were all in dollars." However, the mortgage market collapsed as the result of the crisis and fell by 60 percent. The reasons were macroeconomic, he said. There was a real estate boom in dollars in the higher end of the market; however wages in dollars went down. Properties became unaffordable for most people. "The purchasing power of wages is now the lowest historically," he added. Interest rates in Argentina pose another problem. "Argentina does not have an index instrument at the moment, which makes the growth of the market very difficult."

Luis Largman noted that in Brazil, "the ratios of mortgages to GDP is very low, only at 2 percent," attributable to macroeconomic causes, "real interest problems and undervalued properties" (in Rio de Janeiro, for example, from 1994 to 2005 land did not appreciate at all.

Government tends to be the main driver in the mortgage market, said Guyot, and Babatz noted that a big part of the boom in the Mexican market has to do with the Infonavit, a government institution that is the largest lender of mortgage loans. Until 1993, it was a corrupt institution, but in 2000, new management created a well-oiled machine that has since created a huge market. The SHF as a wholesale lender, is another driver in Mexico and has lately become a catalyzer of mortgage securities in the country. It has even started securitizing loans. Still, Babatz argued that the only way for Mexico to continue growing the mortgage market is through the international capital markets. "We looked very closely at the U.S. and tried to replicate it," he said, "taking advantage of the new financial technology incorporating private entities into the process."

Access to credit information remains a problem in Latin America. In Argentina, Kiguel said, government interference has made access difficult, though the situation is much better in Brazil, where information comes through the central bank.

The United States sees Mexico and Central America as important markets, said McLarty, and is very interested in helping develop the mortgage sector. "You will see continuous capital flows to help finance the markets in the future," he predicted, "even in southern countries like Brazil and Argentina." But Babatz warned that "before any country in Latin America dreams of having a mortgage market, they need to have a local currency long-term curve for government securities." If not, he said, it will require indexation, which can put the country in problems. Guyot concluded the discussion on a high note, saying that "the social effects of the mortgage markets are impressive. We are in front of a huge potential growth of the market for investors. The mortgage market in Latin America is here to stay."

  3:35 PM - 4:50 PM

Can Business Solve Africa's Challenges?

Speakers:
Caleb Fundanga , Governor, Bank of Zambia
Mehret Mandefro , Founding Director, TruthAIDS
Eric Osiakwan , Executive Secretary, African Internet Service Providers Association and Ghana Internet Service Providers Association
Gladwell Otieno , Founding Member, Africa Center for Open Governance (AfriCOG); former head of Transparency International (Kenya)

Moderator:
Laurance Allen , Editor and Publisher, ValueNewsNetwork.com

For five decades, business has been sidelined from discussions of economic development in Africa. The terrain has been dominated instead by rival geopolitical forces, well-meaning international development agencies and non-governmental organizations for which the private sector was an alien phenomenon - at best irrelevant and at worst exploitive. Today the role of the private sector in international development, and the importance of transparency and good governance to economic development, have taken center stage. Discussions have gone beyond increasing aid and debt-forgiveness. The new focus is on the large "missing middle" - investments between World Bank project finance and micro-lending - that is occupied by job-creating small- and medium-sized firms. China and India, in particular, have opened a new silk road to Africa. What are U.S. companies and financiers waiting for? Those intimate with Africa's problems and opportunities will talk about how they see transparency and governance from a truly African perspective.

  3:35 PM - 4:50 PM

Finding Solutions to L.A.'s Gang Problem

Speakers:
Rocky Delgadillo , City Attorney, Los Angeles
Constance Rice , Co-Director, Advancement Project
Gary Slutkin , Professor, Epidemiology and International Health, School of Public Health, University of Illinois; Director, CeaseFire Chicago

Moderator:
David Fleming , Counsel, Environment, Land and Resources Department, Latham & Watkins

"I see gang violence as a humanitarian crisis in U.S cities," said Gary Slutkin of the University of Illinois School of Public Health. Seen from that perspective, Los Angeles, with some 38,000 active gang members, hosts one of the greatest humanitarian crises in the nation.

While the panelists acknowledged the serious challenge posed by reducing gang violence in Los Angeles, they expressed a uniform optimism that a "comprehensive wrap-around strategy" could transform the city's most dangerous neighborhoods. Los Angeles City Attorney Rocky Delgadillo outlined the wrap-around strategy as a three-pronged approach.

The first prong, he said, is prevention. "Gang members have a shelf life," he explained. "If we can stop the kids right now from joining gangs, we won′t have a problem with gang violence in ten years." He stressed the importance of working with parents and schools to provide children with viable alternatives to joining a gang.

The second prong is suppression. "We can′t arrest our way out of this problem," said the city attorney. "However, we need the pressure to make the prevention programs and the intervention programs work." Delgadillo said that his use of gang injunctions has reduced Los Angeles′s gang population from 57,000 to 38,000.

The third prong is eradication. Delgadillo advocated removing the gangs' monetary power by filing civil suits against them for damages they cause to neighborhoods and then using the settlement money to improve those neighborhoods. He said he currently has a bill pending that would allow him to file civil suits against gangs.

Constance Rice, Co-Director of the Advancement Project, noted that Los Angeles spends over a billion dollars a year in salaries for city employees involved in youth development. She recommended bringing these workers together and holding them accountable for reducing gang violence. This could be done, she said, by bringing a combination of agencies -- from the LAPD to Child and Protective Services and the Department of Parks and Recreation -- into each neighborhood that suffers from gang violence and developing a community action plan with neighborhood leaders.

Rice said that only 5 percent to 8 percent of gang members are perpetually violent, and that the problem is mostly a result of teenagers seeking validation. "The kids identify and validate themselves by finding power in joining the clique," she said, "but it′s a 'Clockwork Orange' clique. If you don't give kids a way to affirm their adolescence, they'll find this 'Clockwork Orange' way of doing it."

Rice challenged the audience to become involved as well, adding that the lack of public oversight and political will has not pushed the relevant agencies to perform and has kept the necessary resources from the reaching the problem.

In addition to being a professor of epidemiology, Slutkin serves as co-director of a highly successful Chicago gang-violence reduction program called CeaseFire. He spoke about gang violence as a public health problem and his development of solutions within the public health framework. Slutkin's program has successfully changed norms and behaviors in neighborhoods with high levels of gang violence by using former gang members to influence their peers still involved in gangs.

"Humans respond to messengers most credible to them," he said. "The most credible people to offenders are ex-offenders whom they know and believe and trust very well." Slutkin has combined this mentoring program with larger communitywide efforts designed to stigmatize violence to dramatic effect -- having reduced violence by 60 percent in the targeted neighborhoods.

  3:35 PM - 4:50 PM

Beyond Big: Measuring China's Markets

Speakers:
James Barth , Lowder Eminent Scholar in Finance, Auburn University; Senior Fellow, Milken Institute
William Kazer , Managing Editor, Xinhua Finance
Bruce Richardson , Managing Director, Research and Business Development, Xinhua Finance
Huiyao Wang , Chairman, China Western Returned Scholars Association Chamber of Commerce

Moderator:
Perry Wong , Senior Managing Economist, Milken Institute

As the world's fourth-largest economy, China has been growing at a 10 percent annual rate for more than two decades. However, the lack of timely, accurate and detailed economic data has long concerned investors and researchers. Without this transparency, how can we benchmark Chinese companies and industries against their international counterparts? How can we evaluate the risks in investing in China? And more important, how can the data collection and disclosure procedures in China more closely conform to international standards? The launch last year of the Xinhua Finance/Milken Institute China Indicators revealed a great deal of interest in deciphering and demystifying China's markets. This discussion will focus on these issues, which are critical to investors and observers alike.

Wednesday, April 25, 2007

  6:30 am - 7:45 am

Lessons From My Deployment in Iraq
Milken Institute Associates Breakfast
By invitation only

Speaker:
Paul Antony , Chief Medical Officer, Pharmaceutical Research and Manufacturers of America

This session is limited to invited guests. If you are interested in attending, please send an e-mail request to jmeehan@milkeninstitute.org.

  9:20 AM - 10:35 AM

Understanding Politics and Culture in a Diverse Arab World

Speakers:
Ali Aujali , Ambassador, Chief of the Libyan Liaison Office, Washington, D.C.
Nabil Fahmy , Ambassador, Arab Republic of Egypt to the United States

Moderator:
Steven Green , Former U.S. Ambassador to the Republic of Singapore; Managing Director, Greenstreet Partners

The Arab world is a complex group of culturally, politically and economically diverse nations that at once offers tremendous opportunity for growth, but also varying degrees of risk. Nabil Fahmy, the Egyptian Ambassador to the United States, noted that while it is easy for him to represent Egypt in the United States -- after all, chapters on Egypt appear in every grade-school history text -- the greater challenge is to provide a context for the multifaceted nature of the Arab world.

That world stretches from Morocco to Syria, and from Iraq south to the Gulf States. While the nations share an important cultural component (Arabic language), each also has its own national experience and identity. For example, he said, Morocco has a relationship with West Africa and Europe, yet things are very different at the eastern edge of the Middle East.

Although Arab world is ancient culturally, in character it is actually quite young, with more than half its population under 25. Young people are looking to the future, said the ambassador, and facing the challenge of being part of a global community. Arab countries must engage the international community and embrace economic openness, he added, if they are to achieve the growth necessary to fill the rapidly rising need for nearly 100 million new jobs by 2020.

Ambassador Ali Aujali, Chief of the Libyan Liaison Office, agreed, stressing the importance of business relationships with the West. Libya and the West have had no relations for the past 50 years, and only recently did Libya take the first step toward renewing contact with the United States. Chief among the connections being rebuilt are business and education. "We must rebuild this bridge," said Aujali of education, pointing out that allowing Libyans to study in America would enhance cultural understanding in both regions. He said that Libya wants good relations with the United States but wants those relations to be based on education, business and, most important, respect.

Moderator Steven Green, former U.S. Ambassador to the Republic of Singapore and Managing Director of Greenstreet Partners, asked the ambassadors to touch upon the issues of terrorism and the Israel/Palestine dilemma. Fahmy likened Americans' understanding of fundamentalist terrorism to "trying to watch TV on a distorted screen," saying the U.S. public generally doesn't see the whole picture and tends to forget that before terrorists attacked America, they were attacking Arab targets.

"Invasion and military action will never help us to save the world and prevent terrorism," said Aujali. He expressed a desire for diplomacy and understanding, and said that he thought one of the most important sources of conflict in the Middle East was the Israel/Palestine dilemma. He encouraged the United States to confront the problem of injustice in the region.

Fahmy added that the average Arab is neither anti-American nor a terrorist, but is frustrated with U.S. policy in the region. He also noted that the only answer to the question of Israel and Palestine was a two-state solution with two capitals. Fahmy expressed hope that this is possible in the near term because "both sides need it."

Both Fahmy and Aujali encouraged the United States to move forward and continue to draft peace proposals that will give Israel and Palestine fewer excuses for inaction. Additionally, the U.S. must engage parties as a friend, not as a challenger. If this situation can be cleared up, there will be huge dividends for Arab relations with the West. "I hope," said Aujali, "we will see peace in my lifetime in the Middle East."

  9:20 AM - 10:35 am

Creating Vibrant Regional Economies: What Makes Some Places Thrive While Others Struggle?

Speakers:
Edward Holmes , Executive Deputy Chairman for Translational and Clinical Sciences, Biomedical Research Council; Chairman, National Medical Research Council (Singapore)
Robert McMahan , Senior Advisor to the Governor for Science and Technology, North Carolina; Executive Director, North Carolina Board of Science and Technology
Laura Miller , Mayor, Dallas, Texas
Heather Munroe-Blum , Principal, Vice-Chancellor, and Professor of Medicine, McGill University

Moderator:
Ross DeVol , Executive Director, Economic Research, Milken Institute

A story in The Wall Street Journal recently asked, "Why isn't Philadelphia Boston?" In other words, how do two cities with such similar history and geography end up so different -- one a thriving high-tech powerhouse and the other a struggling urban center? What do Singapore, London and Shanghai -- all successful 21st century economies -- have that other regions don't? Why is Florida putting so much money into building up its life sciences while Nevada bets on growth? What's the answer to creating vibrant regional economies? Is it having leading research universities? Technology clusters? A vibrant cultural life that draws creative workers to an area? What are successful regions doing that might be replicated elsewhere?

  9:20 AM - 10:35 AM

Diaspora Investing

Speakers:
Frederic Brenner , Davos Fellow, World Economic Forum
Dunson Cheng , Chairman and President, Cathay Bank
Al Eisaian , Chairman, Co-Founder, President and CEO, Integrien Corporation
Umair Khan , Chairman, Folio3
José de Jesús Legaspi , Owner and President, The Legaspi Company

Moderator:
Kenneth Morse , Senior Lecturer and Managing Director, MIT Entrepreneurship Center

According to the United Nations, more than 282 million people on the planet live in diaspora communities. Remittances are now the largest form of capital flows into some countries -- surpassing foreign aid, portfolio investment and foreign direct investment. Diaspora Investing.

Jose de Jesus Legaspi of The Legaspi Company started the panel discussion by saying that diaspora investing contributes to growth of human capital and foreign direct investment. His work is mostly with Mexico, where U.S. remittances of $23 billion overtook oil income in 2006.

The Armenian experience has been just as remarkable, said Al Eisaian of Integrien Corporation, adding that Armenia has benefited from diaspora investing in the technology sector especially; a reported US$10 billion of diaspora support has gone to Armenia since its independence in 1991. The percentage of Armenia's national treasury coming from remittances stands at 10 percent.

Moving onto other subjects, Frederic Brenner of the World Economic Forum intervened to illustrate the human aspect of diasporas. The diaspora is more than mere numbers, but also identities, people, acculturation, and deep fear. "I see diaspora as a true method of fertilizing, of cross-fertilizing," he said., augmenting the point with slides taken in 45 countries where he documented how Jewish diaspora groups live and work.

In Pakistan, said Umair Khan of Folio3, he has found that entrepreneurial investments coming from diasporas are far more impactful than donations. He also added that another important activity associated to diaspora groups is how they serve as "ambassadors" for their countries of origin by showing the true face of their nations internationally.

Dunson Cheng of Cathay Bank explained that as of 2005, China had received an estimate of US$622 billion diaspora investing (coming mainly from Hong Kong, Taiwan and Singapore). For China and other countries, he said, an important factor is that diaspora groups are returning to their home countries. This phenomenon grew in Taiwan in the 1980s and 1990s, and brought the human capital that fueled to a great extent the growth of the semiconductor and computer industries there. The preceding is so important, said Morse, that the Chinese government believes that the country′s growth will hinge on educated Chinese diaspora returning.

Diaspora investors have a better knowledge than most other investors of the risks of investing in their home countries, said Kahn, adding that American investors are wise to partner with diaspora members who will help them to understand and navigate the landscape of the targeted countries.

  9:20 AM - 10:35 AM

Fund Management in China
By invitation only

Speaker:
Feng Xiao , Founder, Bosera Asset Management Co., Ltd.

This session is limited to invited guests. If you are interested in attending, please send an e-mail request to jmeehan@milkeninstitute.org.

  10:45 AM - 12:00 PM

Chindia: Changing the World Order

Speakers:
Matthew Hart , President and Chief Operating Officer, Hilton Hotels Corporation
Robyn Meredith , Senior Editor, Asia, Forbes
Frank Sixt , Executive Director, Group Finance Director, Hutchison Whampoa Ltd.
Antoine van Agtmael , Founder, Chairman and Chief Investment Officer, Emerging Markets Management LLC

Moderator:
Jonathan Slone , Head of Global Broking Operations, CLSA Ltd.

The combined economies of China and India -- "Chindia" --have tripled over the past decade. Chindia's emergence is perhaps one of the most consequential developments to the future of the global economic and political landscape, inspiring both wariness and delight among various constituencies. What are the major features of what moderator Jonathan Slone, CLSA, called the "defining shift in the global economy"? This panel assessed the Chindia phenomenon, its features and determinants, and consequences.

Contemporary observers may note that the Chindia economic phenomenon is unprecedented, but Robyn Meredith of Forbes noted that this is nothing new. Around 1600, the combined economies of India and China constituted 50 percent of the global economy. That said, the re-emergence of the Chinese and Indian economies is "one of these shifts we only see every couple of centuries," she added.

Chindia is becoming a price-setter of numerous commodities, is the price-setter of auto parts and books, and plays a significant role in the plastics market as well.

Antoine van Agtmael of Emerging Markets Management stressed the significance of Chindia's rise by noting that "the developed world is no longer the center of the economic universe." However, this is not necessarily bad, as the world is not a zero-sum game. In fact, van Agtmael added, a globalized world is even less of a zero-sum game.

Chindia′s rise also accounts for one of the largest elevations of entire social classes in history. While more than 200 million people lived on less than a dollar a day in the 1990s, the same number now earn more than a dollar per day. Meredith noted that poverty alleviation on such a large scale has exceeded any social or public-policy program to date.

How should the West engage these new economies? Frank Sixt of Hutchison Whampoa felt that instead of focusing narrowly on trade balances, currency exchange rates and other 20th century variables, we should consider 21st century constraints. Fairness in trade, resource allocation and energy matters should be taken into account, as well, when evaluating the basis for engaging Chindia.

While it is convenient to lump China and India into one economic category, some panelists noted that "Chindia" is a misnomer because of the stark differences between the two countries, and the fact that the Chindia phenomenon also involves other countries. While India has relied on markets to grow its economy, China has relied on policy direction from the central government, noted Sixt. Meredith also stressed the differences between China and India through analogy. While she sees China as a dragon -- fear-inspiring, fire-breathing, but weaker than it looks -- she likens India to an elephant --trudging slowly, with lots of momentum but no surprises.

The differences in Chinese and Indian economies are also reflected in the quality of their private companies. While India has several strong, world-class corporations, Meredith said, there are very few strong Chinese companies. Van Agtmael disagreed with the spirit of Meredith′s assessment, noting that China has a competitive edge in manufacturing.

What are the threats to continued economic growth in China and India? All panelists agreed that environmental challenges are the most immediate and serious problems that could turn what van Agtmael dubbed a "prosperity train ride into a train wreck." In China, almost 40 percent of the rivers are so polluted that they cannot even be used for industrial purposes. While it is reassuring that the Chinese leadership recognized in March 2007 that China was unable to meet the targets it set for environmental standards, the risk of failure in the battle against pollution is higher in China than in India because of the sole reliance on central government control. Van Agtmael stressed the need for daring and innovative propositions to improve energy efficiency and pollution mitigation technologies.

As for political threats to continued economic growth in Chindia, panelists expressed varying degrees of concern about the possibility of conflict over Taiwan. Increasing degrees of militarization in both Beijing and New Delhi are also of concern and should merit further attention and study.

  10:45 am - 12:00 pm

Opportunities in the Egyptian Capital Markets

Speakers:
Mahmoud Mohieldin , Minister of Investment, the Arab Republic of Egypt
Aladdin Saba , Chairman and Founder, Beltone Financial
Hani Sarie-El Din , Chairman, Capital Market Authority, Egypt
Mohamed Taymour , Chairman, Egyptian Capital Market Association

Moderator:
Nabil Fahmy , Ambassador, Arab Republic of Egypt to the United States

Egypt is the most-populous nation in the Middle East and has one of the region's largest economies. Egypt's capital markets have matured over the past 30 years, and the Cairo and Alexandria Stock Exchange (CASE) has been among the best-performing markets in the region over the past several years. Increasing foreign investment and the return of Egyptian nationals to work and invest are just two reasons for this growth. This panel will discuss investment opportunities in Egyptian capital markets.

  2:10 pm - 3:25 pm

India: The Next Global Growth Engine?

Speakers:
Sabeer Bhatia , CEO, NAVIN Communications Inc.
Ashank Desai , Founder and Chairman, Mastek
Edmund Olivier , Founding General Partner, Oxford Bioscience Partners
Joseph Sigelman , Co-Founder, OfficeTiger LLC

Moderator:
Bachi Karkaria , Consulting Editor and Columnist, The Times of India

India, the world's most populous democracy and one of its most culturally diverse nations, has achieved rapid economic growth in the last decade. A booming I.T. industry, global outsourcing industries and cinematic success in "Bollywood" all contribute to impressive GDP growth - 6 percent to 7 percent a year since the 1990s - and set the nation up as the next global growth engine. Its stable political system, well-established legal framework and efficient domestic capital markets also provide a sound foundation for more foreign investment. However, as an emerging market, India faces many obstacles, including inadequate infrastructure investments in transportation, the power supply, water, sewage and ports. And the central, state and local governments do not always speak with the same voice on developmental issues. Will these factors prove to be stumbling blocks along India's path of development? What role will India play in the world economy 10 to 15 years from now? What will India do to address issues of inequality, poverty, and environmental sustainability?

  3:35 PM - 4:50 PM

Israel: Confessions of an Economic Growth Engine

Speakers:
Doron Almog , Co-Chairman, Athlone Global Security
Joseph Bachar , Director General, Israel Tax Authority, Ministry of Finance
Orna Berry , Chairperson, Israel Venture Association; Venture Partner, Gemini Israel Funds
Raphael Hofstein , President and CEO, Hadasit Ltd.
Joe Zuback , Chief Technology Officer, Senior Vice President, Siemens Water Technologies

Moderator:
Glenn Yago , Director, Capital Studies, Milken Institute

Beyond the headlines, the results of economic and financial reform in the wake of last summer's second Lebanese War have been remarkable in Israel: 4.5 percent economic growth in 2006 (8 percent for the final quarter), unprecedented foreign direct investment of $13.4 billion, historical stock market highs, dramatically low interest rates, a budget deficit of less than 1 percent of GDP and the remarkable achievement of becoming a net-creditor to the world. Israel's pioneering work in high technology, the Internet, clean technology, security, biotechnology and agriculture drive growth at home and beyond. Economic growth, however, has been uneven. Israel has the highest poverty rate among western developed countries (24.4 percent), persistent unemployment (8.4 percent) and growing regional and income polarization. Panelists will explore lessons learned in becoming a competitive entrepreneurial force for new technologies and the challenges of transferring these lessons to Israel's vision and hope as a nation and as a leader in the global economy.

  5:30 PM - 6:30 PM

Milken Institute Israel Center Reception
By invitation only

This session is by "invitation only" and is limited to invited guests. If you are interested in attending, please send an e-mail request to jmeehan@milkeninstitute.org.


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