World War II to 2011: Changes and Challenges in the Global Economy

Article excerpt

This paper discusses six major changes and challenges that have emerged since World War II that will shape the global economy for the indefinite future. These are the changing economic role of women, the emergence of the global economic and financial system, the reemergence of state-supported enterprises, the impact of the Internet, the global diffusion of opportunity and innovation, and globalization as an opportunity and a threat. How these challenges are addressed will have important consequences for business and for public policy. In addition to the prepared remarks, this paper also has a summary of the question-and-answer session that followed Dr. Hormats' address.

Business Economics (2011) 46, 144-153.

doi:10.1057/be.201L18

Keywords: international economics, globalization, economic role of women, state-supported enterprises, economic impact of the Internet

1. The Emergence of Women

Today, I was at a celebration that Secretary Clinton and First Lady Michelle Obama held for the 100th anniversary of World Women's Day. I mention this because it was very impressive to see women leaders from all over the world there, and all of them had interesting things to say. Prior to this, I was talking to Secretary Clinton about World Women's Day, and I told her that I was going to give a speech to NABE. We then discussed the emerging role of women in transforming economics--a point that I have also addressed in previous speeches. When I was at Goldman Sachs, the firm published a report that quoted the Chinese saying that women hold up half the world. It is certainly true that women make up at least half the world--and in some countries a lot more than that.

Think back on the American economy over the last hundred years and look at the major changes. A hundred years ago, the economic role of women was confined to very few areas. One of the most significant changes in American law and society that has enhanced opportunity and productivity over this century is the change in the economic status of women. There has been a growing and more significant role for women in the American economy, albeit that this development has not been perfect and still has a way to go. Much of the contribution of women remains unpaid or underpaid, despite its vital role in America's success.

When you look at developing countries--particularly the Arab world, but many other parts of the world as well -one of the reasons some countries are not living up to their full potential--and this was described by a number of the women honorees at today's anniversary celebration--is that they do not give women the chance to participate fully, or even at all, in their economy. As a result, they are depriving themselves of half of their human capital, of half of their economic potential. It is increasingly clear, when you look at economies around the world and determine how likely they are to achieve progress over the next 5, 10. 15 years, that if they do not allow women the opportunity to participate fully in their economies, those economies are going to underperform dramatically. For strong economic performance, it is necessary to give women the education, opportunity, and the rights they need, as well as other reforms.

One of many lessons from what is going on in North Africa and other parts of the Arab world is that liberation has to include liberation of women. It has to include women's rights and women's opportunities. If these countries are really going to be democracies and economies in which participation is meaningful, that participation has to include men and women, equally and fully.

As far as American foreign policy is concerned, ensuring equal opportunities and upward mobility for women is very important for Secretary Clinton. It is also very important for me, and I think it is going to be increasingly important for all economies that want to grow in the future--in the Arab world in particular. …