Verwaltungsratspräsident und Delegierter, MS Management Service AG, St. Gallen
|Introductory Remarks for the Panel|
"Location of science and research a global shift?"
- Discussions during the Alpbach Forum 2005 cast light on the strengths and weaknesses of Europe. As we have seen, European consciousness must evolve in the midst of economic, political and social upheavals around the world and to face the age of globalisation.
- Still, the apparent emergence of a borderless world is neither really new, nor is the process of globalisation complete. Goods, investment, people and money all moved freely and fairly easily across national borders a century ago. At that time, Great Britain and its Empire occupied the position in the world that the United States more or less occupies today: commercial leviathan, military giant, moral and cultural arbiter. Sterling was the world s preferred currency for trade and for saving. The slide into the Great War ended the experience. Even using this as a touchstone, today s global economic convergence and trade integration have generated a new dimension to the world economy.
- As late as the Industrial Revolution in Great Britain, it can be argued that China was still the world s most advanced economy and society. After two centuries of relegation to the sidelines, both it and India are again starting to flex their strength. Together they will move the global centre of gravity definitively away from the Atlantic towards the Pacific. Global competition will be extend well beyond the penetration achieved by Japan in its brief heyday in the 1980s and early 1990s.
- It is up to Europe to accept the new reality. The world s economic locomotives are now in Asia. The next ones Brazil, possibly Mexico are in Latin America. EU members, particularly the old Continental core members, will have to make painful choices in this new geo-economic landscape. The relative competitive position of Western Europe faces decline. Jobs and investment opportunities alike migrate to Asia, to Brazil and to Central Eastern Europe, no longer the EU periphery. The ability of Continental European economies to finance their high standards of social welfare could be impaired. How can scare resources be allocated best, at the supranational, state and also corporate level in a radically competitive environment?
- In the United States, leading-edge companies currently generate new and more highly qualified jobs at home to replace functions and services relocated elsewhere. Unlike most of core EU-15, the net outflow of jobs and investment is modest, leaving the U.S. economy energized and motivated, the market for U.S. goods and services enlarged. In the robust US economy, innovation thrives, with a healthy balance maintained between basic and applied research. Whatever the US loses in textiles or domestic appliances, is offset by the emergence of entirely new economic sectors such as biotechnology and nanotechnology.
- This generally positive outlook is in sharp contrast to the situation in Europe. European labour markets are less flexible, mobility is difficult and rare. The result is that European workers on all levels have suffered more, and profited less, from the dynamics at play. The competitiveness of Europe will depend more and more on
(1) excellence in science and interdisciplinary research,
(2) a drive for innovation, accepted in both the economy and, importantly,
(3) greater ability to turn research results into marketable products and
- The old status quo is no option. The apparent abandonment of the Lisbon Agenda is a warning signal in itself. While Japan in fact increased its R&D spending in the ten years of deflationary spiral, Europe is allowing its R&D ratio to fall still further. The desperate need for innovation and scientific progress cannot divert EU budget discussions from an obsessive focus on agriculture and subsidies for sunset sectors.
- Challenging economic circumstances are intensified by anything but favourable demographics. The ageing and shrinking of European societies hold out no clear perspective for growth. When stagnation looms, education and research, fundamental for innovation, are of crucial importance. In Europe, greater dedication to excellence is required on all level from cutting-edge research to the university system, from elementary education to vocational training and lifelong learning. Moreover, scientific excellence must be more respected: for that the European general public must acquire a better understanding of the benefits of science and technology.
- Europe is still losing talent towards North America, and possibly now also towards Asia. This brain drain further erodes Europe s long term prospects. R&D spending is low and stagnating. Public funds for investment in the future are constrained by current economic problems. Business investment in R&D and innovation falls far short of that in either the US or Asia. Where then will Europe find more resources for research and education? From where will it draw the stimulus for accelerated innovation?
- In terms of preferred location for science-based industry and for research, the tide is changing fast. The booming research clusters in Asia are no longer simply cost-attractive they are nowadays often truly world-class. Significantly, the skill maps of the different countries vary considerably, in line with policy choices in an age of knowledge-based growth. Consider China, India, even Japan. The advantages of India, for example, include an abundant pool of diligent researchers, available expertise in natural sciences, a skilled workforce, close cultural links to overseas communities and knowledge of the English language. In China, on the other hand, property rights and the Rule of Law are in many senses still uncertain, meaning litigation risk, as well as the potential for sustained geo-political conflict with the West. Japan, a mature industrial economy with severe demographic problems, can seem closer to the European mean than it is to its Asian neighbours or even to the US.
- Global access to information contributes to global economic convergence. The emergence of regulatory regimes extending beyond trade complements this benign scenario. Geo-political and strategic developments seem, however, out of tune with economic shifts. These give rise to frictions not only in today s knowledge economy, but more profoundly also in cultural and societal relations.
- Tension is inherent in the interplay between high growth dynamics in Asia, a largely positive outlook for America and a demographically-exacerbated cap on growth in Europe. International risks emerge when this tension can no longer be contained. Demographic shifts are triggering dramatic changes in the demand and supply patterns for key resources, especially for energy. Inflexible European labour markets hamper emergence of a new international division of labour. Much needed structural reform and adaptation to a changed world are blocked. Spheres of national interests collide with an open integrated global mindset already dominant in other advanced societies. And it is this open integrated mindset which allows innovation to flourish, R&D to be most profitable.
- This then is the current geopolitical and geo-economic context. It gives rise to numerous questions for our panel to deal with regarding the location of science and research. Among them I would like to suggest:
# What qualifies a hub as a centre of educational and science excellence?
# How can government policies and corporate strategies reinforce each other?
# What societal choices and cultural differences encourage scientific excellence and even more, an economy s ability to sustain and to exploit it?
# Which skills and competences make up a science cluster? Where should the competence of transforming research results into marketable products and services be located?
# What are the governing logics of a possible shift towards India and Asia (brain drain/brain gain)?
# How does a non-democratic, still totalitarian, China fit into a global picture which, in many senses, it seems poised to dominate?
# Will all this imply sweeping or evolutionary changes?
# What are Asia s expectations vis-à-vis Europe and the US?
August 25th 2005