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Intervention by Hervé Gaymard at the Global Lodging Forum: "A new use for the world"

Former French Minister of Economic Affairs and Finance, Hervé Gaymard was given a mission by the Government to improve the influence of French companies in the emerging countries. This work resulted in a report entitled: “A new use for the world”. He exposed the major themes during the lunch-debate organized during the 11th Global Lodging Forum by MKG at the Hotel George V.

Contrary to popular belief, today’s globalization trend is not the first. It is at least the fourth since modern times, meaning since the discovery of America. After a Spanish globalization, a British globalization in the 19th century, based on "Sea power", as geopoliticians like to call it, the third, American, one after World War II, was only partial because a significant part of the world was under Soviet control. Since the fall of the Berlin Wall, we have been living a fourth globalization. It is interesting to observe that the economic openness rate reached just prior to 1914, meaning the share of goods and services that are produced in the world and subject to international commerce, was achieved once again only at the end of the 1970s. This means that globalization, which came to an end with the European civil war, was already achieved. And yet, globalization as we know it today is very different from the others for several reasons.The final axis of this work derives from my observation that our political or administrative tool is very poorly organized for taking this new aspect of globalization into consideration. It is necessary to establish battle order and I made a few propositions for this to obtain a shorter decision circuit that is more closely controlled, more rational and above all better evaluated for our international policies. Today’s initiatives need to be highlighted as in Shanghai where the different institutions such as the post of economic expansion and chambers of commerce work efficiently, intelligently, and with a good distribution of work. Corporations must rise in power… it is not the job of an official with a diplomatic passport to do commerce.The first is that it is not only commercial but also financial. The second is that new technologies promote exchange and information, bank and financial transfers more than before. The third characteristic is that implantations happen more in the form of directs investments and no longer only in the form of exchanges of merchandise. The fourth difference comes from the fact that today’s economy involves assemblage in which the goods are produced just about everywhere around the world and assembled elsewhere. The fifth characteristic is that this globalization happens in a finite world, creating a formidable problem for the environment. Thus the growth of emerging countries doesn’t happen within the same environmental context as the growth of Nordic countries in the 19th century and the early 20th century. And finally, the last characteristic of this globalization, and it is no slight matter, is that we are in a multipolar world, where no one country reigns supreme over another.We may no longer talk about Spanish, American or British globalization. The emerging countries–China, India, Brazil in particular- are nations which each considers itself the center of the world, like heirs of a long and ancient civilization that has nothing to learn from us Westerners.Within this context, there must be no mistakes regarding the linguistics. Of course, “airport English” is the shared language that makes it possible to understand people pretty much everywhere. But just because the elite of these countries have full mastery of English and Nordic languages does not mean they lost touch with their deep-rooted origins. In reality, it is necessary to be much more subtle when suggesting that the domination of English reflects an Anglo-Saxon domination, because the deepest cultural foundations are extremely different in reality.Concerning this fourth globalization, three series of questions arise. The first are about economic theory.As a citizen, I am not satisfied with the caricatural debate between the Financial Times and José Bové. On the one hand, we are told not to intervene and leave the market to follow its course. I feel that this is an optimistic vision, very mich unrealistic. At the other end, altermondialists are partisans of closing all borders and doing the least trading possible. I call for renewed economic considerations in order to see the world as it is today, by questioning the theories on international exchanges elaborated at the beginning of the 20th century. This lack of theory explains the widespread cultivation of fear of this new globalization.The other questions may be directed towards Europe. Faced with the new major emerging nations, the pertinent perimeter is Europe, considering its size and population. We underestimate our achievements in the past 50 years: we have reconciled and built the European Union. When I travel in Asia, there is still a feeling that World War II is still not totally over in people’s minds. On the contrary, they show great admiration for the French-German reconciliation.All European nations must have a clear desire to play the European card, which is not the case for some countries such as Great Britain, Sweden and Denmark, where Euroskepticism is ongoing. Even in other countries international competition remains strong. Our counterparts continue to view the individual "old nations" that compose Europe as separate identities. In order to avoid the pitfalls of European countries that confront one another on outside markets, veritable European companies should be created.That will be my second remark. I regret that European Commissioners are not more interested in seeing the creation of European "champions". Instead, I believe it is necessary to promote the consolidation of European companies in order to have greater strength in the global economy. Today, European authorities appreciate the perimeter of European competition to authorize consolidations but not with respect to the global market.Another example concerns the cost of electricity. If we are not careful there will be no more heavy industry in Europe. The challenge lies in allowing European industries to benefit from reasonable costs for electricity. In some ways, Europe is still naïve and not offensive enough to defend its interests.As for questions adressed to us, the French population, they concern several areas.If we place ourselves in a historic perspective, it is the first time ever that France has been able to invest in the “broad reach”. The tragedy in our history over the last five centuries is that we were never able to chose between Vauban and the fortifications on the Rhine, and expansion. The British didn’t hesitate and invested in the sea and the world. We have achieved peace in Europe, and despite the current turbulence over Europe, it is absolutely necessary for us to project ourselves into this new world. I am struck by the difference between our corporations –particularly the biggest ones, which understood this years ago, and are developing remarkably on an international level, especially in emerging countries– and the politico-administrative-unionized class that is unaware of this world in which we live. The work I have done is not theoretical. I have made a certain number of very specific propositions based on contacts with these corporate leaders who are well aware of these new emerging markets. These are developed around four axes:The first axis, is the wager on human intelligence training. We must reinforce university exchanges between France and emerging countries. Australia, the United States or England are ahead, and even Germany has joined them, albeit a little late. We, instead, are very late. We have a very good network of French high schools abroad and it is unfortunate that we have not gone further on a university level. Moreover, I have observed in certain emerging countries that structures such as German chambers commerce employ only local employees and managers. Only the director is German. And these chambers commerce are like private actors, operating without subventions, supported only by German companies.The second axis concerns international trade. Today’s deficiency of France with respect to countries with comparable economies is due to the fact that our small businesses are too small with respect to our German competitors, for example. It is necessary to implement a full series of measures in order to grow our small businesses. Those that have already been taken are beginning to reach maturity, but more needs to be done with regards to inheritance taxes for family-owned businesses.The third axis is to help these emerging countries access world governance by associating them, for example, in the G8. It is clear with what is happening in Africa. China has a very dangerous policy because it does not feel responsible among the big players and thus does not respect the rules set by the important international bodies such as the IMF or World Bank.The final axis of this work derives from my observation that our political or administrative tool is very poorly organized for taking this new aspect of globalization into consideration. It is necessary to establish battle order and I made a few propositions for this to obtain a shorter decision circuit that is more closely controlled, more rational and above all better evaluated for our international policies. Today’s initiatives need to be highlighted as in Shanghai where the different institutions such as the post of economic expansion and chambers of commerce work efficiently, intelligently, and with a good distribution of work. Corporations must rise in power… it is not the job of an official with a diplomatic passport to do commerce.

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