The three issues explored at the recent Aspen International Conference event – the “World Economy Dialogue” held in Rome on June 30, 2014 – were the subject of discussion at this first joint meeting of the Friends of Aspen and Aspen Junior Fellows. The resources to be called upon for the global recovery, the energy challenge facing Europe, and sub-Saharan Africa as a frontier for global growth hence provided the guiding framework for a debate informed by the specific profile of those in attendance, namely, entrepreneurs and young people.
It was noted that, in many European countries, a long-term drop in output has been compounded by persistent weakness stemming from the recession. Imbalances are increasing: at a social level, the crisis in domestic demand and income disparity has led to under-consumption and overproduction; at the level of trade, the imbalance is between Germany and the rest of the European Union. In terms of intergenerational equity, a shift in income distribution is in progress away from the young to the elderly in the form of pensions. There are calls from all quarters for structural reforms, but the fundamental sticking point is that the more profound the crisis, the slower the benefits of reforms unfold. The consensus required for implementing change and achieving social cohesion has been weakened. There are increasing demands for a “Real Economy and Competitiveness Compact”, not just a Fiscal Compact, with an eye to the recent renewed focus of the United States on the manufacturing sector. As Italy’s 6-month presidency of the Council of the EU is ushered in, there is an evident need for greater integration within the EU, greater Single-Market integration (especially in areas such as energy, the digital economy, and services), but also greater integration with other countries, with specific regard to ongoing talks for a Transatlantic Trade and Investment Partnership (TTIP), which have become of major political significance in counterbalancing the likely future role of the BRICS countries in the global geopolitical order.
The debate on international economic relations and the challenge posed by the recovery crossed over into the second issue discussed, namely: energy. It was suggested that the Russian-Ukrainian crisis has highlighted the need to diversify sources of energy supply (both from within and outside the EU), with the opportunity of exploiting shale gas in certain parts of the world opening up new prospects. The other major challenge identified was that of infrastructure, in particular, the need to interconnect distribution networks to create a single European energy market. The latter was described as currently manifesting as a confused jumble, especially in the field of renewable energy, where significant differences in policies between different countries is resulting in a loss of synergy and value.
The diversification of supply sources and the interconnection of energy networks was seen as entailing extending an opportunity to sub-Saharan Africa to serve as a driver of global development. As well as becoming a raw materials producer, the region was also seen as affording a new pool of consumers. Indeed, figures were cited showing that, by 2020, the region will boast some 128 million middle-class households (more than in the United States), concentrated in twenty-four metropolises that are growing at a much faster pace than their three major European counterparts. Sub-Saharan Africa today is the Asia of twenty years ago, as evidenced by the significant investments being injected by sovereign wealth funds into three main areas of opportunity (the agro-food industry and tourism, alongside energy) – all intricately bound up with the wildcards of security, governance and leadership.
Against this uncertain and dynamic backdrop, it was argued that technological innovation will play a game-changing and unpredictable role, giving rise to questions as to whether future growth will stem more from policies or from the application of new technologies. By way of conclusion, it was suggested that Europe, in particular, must – more so than coming up with diagnoses – find solutions internally that will require authoritative and effective leadership, it being acknowledged that today it is perhaps possible to find new Keyneses, but more difficult to come by new Roosevelts.