Global Business Leaders Wrap-Up

INSEAD Professors offer summaries of the conference

Acting Dean of INSEAD Peter Zemsky
It is really dangerous when businesses disengage. You can see what happened in Greece on this front and this could be a harbinger of what can happen to the rest of Europe if we're not careful.

Deputy Dean of Faculty & Research Ilian Mihov - 
What Europe can do to find its own niche is to remove barriers so that people can create new businesses. It doesn't matter that Europe is smaller than China or India. Switzerland is a small country and it's successful. We are now in the same situation as the 1970s - and you cannot create growth by printing money to put into the economy; you only create inflation.

Deputy Dean for Executive Programs Miklos Savary - 
What can you do to change the situation in Europe today? There are roadblocks to be overcome. Dialogue and collaboration are the key here and the potential for human beings to collaborate will help overcome roadblocks. Social networks are catching on in this regard globally and helping create collaboration through dialogue. This kind of collaboration is helping to create innovation, too. Research shows most of it appears to be in the US, the Far East...but not much in Europe and that's a little scary. We're using social networks - but not for innovation.

Q&A
Zemsky comments on a question from audience on austerity vs growth..."Germany is still traumatized by inflation....We should keep in mind the (post World War One) Treaty of Versailles and the effect austerity had on Germany at that time." 

INSEAD Professor Ilian Mihov's Conversation with Jean-François Copé

M Copé is the Secretary-General of the French Political Party UMP, a member of the French parliament (Seine-et-Marne) and Mayor of Meaux.

The future of Europe is contained in one word: imagination. The definition of this word is "competitiveness." Those were Jean-François Copé's opening words. "The crisis that we have been facing now for five years forces us to re-think our economy. Falsely stimulating purchasing power does not make for sustainable growth. We know that... and this is the most fundamental weakness of political decision-making in Europe."

Competitiveness is the new frontier for Europe; reducing public debt is not enough. The challenge is more difficult for an old continent than for a new one such as the US.

Copé points out three key issues:

1. Stabilize the financial sector. All eyes in Europe are focused on this short-term question, but this is also the future of our capacity to finance the economy. "If we cannot sort this out we will be unable to sort out anything else," he said.

2. Limit public spending - this will be a real revolution in Europe.

3. Build new conditions for competitiveness.

Copé favors the unified banking system which emerged as part of the recent pan-European meeting concerning the banking and debt crises in Spain and Italy as this agreement makes the pressing issue of financial stability more controlled. "But the real issue now is to control public spending," he told the INSEAD Global Business Leadership conference in Paris. "This is more important than even reducing debt because it proves we can do better with less."

But how to do this? "If you say to people you will reduce taxes they like it; but if you then tell them as a result you will be cutting pubic spending...they don't... nobody wants to see cuts in their own cities."

From the opposition

As expected, Copé is concerned about budget plans under recently-elected French President Francois Hollande. "We know that we cannot reduce the number of civil servants if we reduce the amount of public spending," he said. "I know Spanish and Italian public opinion is worrying... the growing unpopularity of Mr Monti is growing." Copé said France can accept cuts if the capacity to bring the country to a high level of competitiveness is there.

"Competitiveness means reducing public spending and creating a flexible labour system and modernizing the social system... but the public is not ready to do this and this is the key issue for now."

We have to reform the labour legislation and we have keys for this in a European model. We need legislation for innovation and we have to build up small and medium sized enterprises as Germany is doing. We do have the keys to do the job. It will be difficult mainly because of a question of mentality rather than the economy. We have the means; we have to organize a European strategy."

Going forward

Going forward, the conservative politician sees two issues for Europe:

1. Problem of European governance. The idea of a federal Europe is not possible - there can be no 'United States of Europe'. How do we build a Europe which is efficient? Too much time is lost in discussions .

2. Strategic vision - this is not clear as each state as its own problems and levels of development and this could be at odds with European strategy...so we need leadership and this leadership cannot be achieved without a strong link between France and Germany.

Copé said he's worried that the new French government cannot effect this close link.