This is year's Official APEC CEO summit publication

Table of Contents

Welcome by Craig Mundie & Michael L. Ducker 10

Message from Senator Daniel K. Inouye 12

Special message from Hawaii Governor Neil

Abercrombie and Lt. Governor Brian Schatz 14

Message from Honolulu Mayor Peter B. Carlisle 16

Editorial 18

Editor’s Note 19

International Trade- 20

The Lifeblood of the 21st Century by Manuel C. Menendez III,

Founder, MCM Group Holdings Ltd -

8M8 LLC and President & CEO Elgin China Ltd.

Welcome by Vladivostok Mayor Igor Pushkaryov 22

Publisher’s Note 24

An Inside Look at the APEC Summit 36By Dr. Ira Kasoff, former Deputy Assistant Secretary for Asia,

U.S. Department of Commerce, International

Trade Administration (ITA)

APEC - The Next 10 Years 40By Hanna Trudo, Diplomatic Courier Washington Correspondent

Asia Paciic Tourism Deined by Rapid Changes 44By Ken Scott, ScottAsia Communications

Asia Rising – The View from Hawaii 50By Mike McCartney, President & CEO, Hawai’i Tourism Authority

The Women’s Century 60By Chrisella Sagers, Diplomatic Courier Correspondent

APEC and U.S. Small Businesses: 62

Let’s Strengthen this Prosperous Partnership By Francisco J. Sánchez, U.S. Under Secretary of Commerce

for International Trade

Universities: Crucial Partners in

Meeting the Challenges of the 21st Century 68By Michael K. Young, President, University of Washington

The City of the Future 70By Chrisella Sagers, Diplomatic Courier Correspondent

Yoshihiko Noda’s Vision for Japan 72By Hanna Trudo, Diplomatic Courier Correspondent

Building an Innovation Ecosystem 78By Deb Henretta, Group President – Asia, Procter & Gamble

Building a Sustainable Environment 82

for Growth and Prosperity in APEC By Richard P. Lavin, Caterpillar Inc., Group President

Creating a Common Commercial Environment 86

in Asia and the Paciic By Grant Aldonas

The Path to the FTAAP 94by Chrisella Sagers, Diplomatic Courier Correspondent

21st Century Workforce and Societal Shifts 96By Lindsey L. Larsen, Diplomatic Courier Correspondent

OP-Ed: You Cannot Cut the Seamless

Web of History 98By Robert F. Bennett, Former U.S. Senator and

Resident Scholar at the University

of Utah’s Hinckley Institute of Politics

Rethinking Healthcare: China’s Aging Population 106By Jordan Fischer, Hinckley Institute of Politics

Global Financial Regulation in a Coordinated Fashion 112By Mark Pittman, Hinckley Institute of Politics

Pressured to Study, Unable to Perform 116By Shawn Quigley, Hinckley Institute of Politics

Making Sense of Fukushima 120By Henry Sokolski, Nonproliferation Education Center

and Hinckley Institute of Politics

A Participatory Approach to Democratic

Reform in the Philippines 122John D. Sullivan, Ph.D, Executive Director,

Center for International Private Enterprise (CIPE)

EDITOR-IN-CHIEFAna Carcani Rold

EXECUTIVE EDITORSKirk L. Jowers

Courtney H. McBeth

MANAGING EDITORSRochelle M. Parker

Chrisella Sagers

CONTRIBUTORSGrant Aldonas

Robert F. BennettJordan FischerDeb Henretta

Ira Kasoff

Lindsey L. LarsenRichard Lavin

Mike McCartney

Mark Pittman

Shawn Quigley

Chrisella Sagers

Francisco J. SanchezKen Scott

Henry Sokolski

John D. SullivanHanna Trudo

Michael K. Young

GRAPHICS DIRECTORHenri de Baritault

COVER DESIGNEllesse Sorbonne

LEGAL

The oficial APEC CEO Summit Magazine is a yearly publication independent of political afiliations or agendas published by The CAT Company. The articles in the APEC CEO Summit Magazine represent the views of

their authors and do not necessarily relect those of the editors and the publishers. While the editors assume responsibility for the selection of the articles, the authors are responsible for the facts and interpretations of

their articles. Authors retain all legal and copy rights to their articles. None of the articles can be reproduced without the permission of the editors and the authors.

EDITORIAL

Editor’s Note

For those of you attending the 2011 APEC CEO Summit, welcome! This has been both a challenging and

rewarding year for the Asia-Paciic Economic Cooperation (APEC) forum. Challenging because we are traversing testing times in our global economic stage; and, rewarding because more and more creative partnerships and

alliances are being forged between the public and private sectors because of those conditions.

APEC is the premier forum for facilitating growth, cooperation, trade, and investment in the Asia-Paciic region. Its annual Leaders and Ministerial meetings are attended by heads of state, cabinet ministers, business leaders,

and the heads of the World Bank and World Trade Organization, among many others. The Hawai‘i meetings, November 12-20, 2011 at the Hawai‘i Convention Center, are expected to draw more than 10,000 people to Honolulu, a welcome boost for the state’s tourism industry.

When leaders meet in Honolulu this November, they can take pride in what their countries have achieved. As a result of APEC members’ cooperation, more goods, services, capital, and people are moving freely around the

region than ever before. Border barriers, tariffs, and customs measures have been streamlined to give way to practical procedures that save economies and businesses billions.

But border procedures are no longer the issue of the day, as most traditional barriers to trade are now low or gone. These days, the issues to tackle are logistics, security, and economic regulations. As the APEC process delves deeper into solving these issues, it can learn a lot from another body of economies, the European Union

(EU). The EU experience teaches us that getting rid of border barriers is not enough. The Europe of 1970 had a free trade area but when that was not enough, it created a single market initiative, which tackled a wider range of

costs and risks involving European members’ trade. APEC’s focus should be the tackling of impediments to in-

ternational commerce by giving attention to regulation of domestic as well as international markets and their ability

to manage structural adjustment.

APEC’s major strengths of building capacity through the sharing of experiences and best practices will be a

plus in the next wave of trade reforms. Because APEC is voluntary and non-binding, its unique approach enables smaller groups of like-minded economies ready and willing to undertake reforms to go ahead irst, allowing others to join in later when they are ready. If APEC leaders continue with this approach APEC will continue to record concrete achievements, year after year.

Lastly, hosting APEC in Hawai‘i this year ampliies the experience of the meeting. President Barack Obama’s native town is one of the world’s most diverse Asian-Paciic communities and will be an ideal host for the group.

We hope you will enjoy the selection of features and articles penned by established voices from the business,

leadership, and academic community. They represent the stakeholders of a growing and powerful summit that is gaining momentum.

Ana C. RoldEditor-in-Chief

International Trade - The Lifeblood of the 21st Century

This year the United States and the State of Hawaii

are honored to be selected by President Barack Obama as the host of the Asia Paciic Economic Cooperation meetings commonly known as APEC. These meetings are expected to draw more than 20,000 people to

Honolulu. These high-powered experts, business and political leaders will not only place Hawaii in the forefront

of much of the world’s media but will also serve as a

welcome boost for the state’s tourism industry. The par-ticipants will also experience the best part of Hawaii, the

Aloha spirit of its people. A unique multi cultural, multi ethnic, tolerant society that lives harmoniously and

whose population has many roots to the APEC nations.

Not to view the future of American commerce as

being closely intertwined with the future of the Asia Paciic Economic region would be a major mistake for the United

States. The Paciic region, being both dynamic, diverse and evolving, contains some of the world’s fastest growing

economies. This region represents 41% of the Worlds population, 45% of the Worlds Trade, 54% of the Worlds GDP and according to the US Department of Commerce,

some 60% of all US exports. More importantly the APEC member economies, with many small and medium sized businesses (SME’s), are emerging as the entrepreneurial drivers of these rapidly changing economies. In the US SME’s produce many jobs and function as the economic

lifeblood of the US economy and are where more than

50% of all private sector employees earn their living. During the past 2 decades SME’s have generated 67% of net new private sector jobs in the US.

Many people are unfortunately unfamiliar with

APEC and its 21 nation member economies. Founded in 1989, APEC functions as a unique forum in which, through consensus, leading experts and political leaders

from around the world speak about common trade and

investment issues in an open and forthright manner. The conference’s stated goals are:

• to develop and strengthen the multilateral trading system between members;

• to increase the interdependence and prosperity of member economies;

• to promote sustainable economic growth,Additionally:• APEC works to harmonize, standardize, and

simplify international customs procedures.• APEC implements technical assistance projects

which develop skills and strengthen economic infra-structure.

• APEC strives to make travel safer, facilitating faster processing of legitimate travelers while reducing oppor-

tunities for unauthorized and improperly documented persons to cross borders.

The APEC conference relects much of the Paciic region’s diversity of interests. The conference makes Hawaii a world center for the of exchange ideas leading to

the expansion of ties and strengthing of relations between

peoples and nations. The APEC conference stands as a reminder that in the 21st century our world economy

is rapidly changing…the Asia Paciic Century is not only upon us but is moving ahead with great momentum. These economic changes touch all of our daily lives and

impact the way that we work and live.

From an American perspective the forum could not

come at a better time. International trade is the lifeblood of the twenty-irst century and anyone who has even spent a short amount of time in Asia will be keenly aware

of the economic powerhouse that is modern Asia. The forum will of course be examining all aspects of interna-

tional trade. Travel and tourism (T&T), however, due to Hawaii’s location and its importance in international trade

should be a major topic for discussion.

Reviewing the comparative data from APEC

members, it is clear that their citizens enjoy a lower cost of living because of reduced trade barriers with lower prices

for daily goods and services. Some APEC economies have offered greater job opportunities leading to poverty

reduction. On a social level people living in the APEC region also beneit from its anticorruption and human and food security related initiatives. These are essential elements to travel and tourism.

T&T is not only big business in Hawaii but also

throughout the Asia Paciic Basin. All too often departments of commerce fail to recognize that T&T is perhaps one of the world’s premier export products. What especially makes T&T a valuable export product is

that, if cared for properly, it is a sustainable and renewable

resource. Unlike primary resources, such as petroleum or minerals, travel and tourism is not inite. No matter how many people visit the ocean, the ocean is still the ocean,

and no matter how many people view a mountain, the

mountain remains in place. In fact, in places that have lost manufacturing jobs, tourism offers an alternative

advantage in that unlike manufacturing jobs, visits to a

speciic locale cannot be shipped offshore. Addition-

ally business leaders who travel are part of the travel

and tourism industry. Without functioning transportation hubs, business ready hotels and instant worldwide com-

munication international trade ceases. Apec CEO Summit 2011

20

by Manuel C. Menendez III, Founder, MCM Group Holdings Ltd - 8M8 LLC and President & CEO Elgin China Ltd.

New-generation i30 made world debut at 2011 Frankfurt International Motor Show

- New-generation i30 builds on success of Hyundai’s best-selling model

- Designed, engineered and manufactured in Europe, for Europe

- Upgraded diesel engine: CO2 emissions under 100 g/km

At the 2011 Frankfurt Interna-

tional Motor Show (IAA), Hyundai has unveiled its new-generation i30, a vehicle the company expects will

build on the success of the original

model thanks to enhanced design,

quality, performance and eficiency.

Designed and engineered

at the Hyundai Motor Europe

Technical Centre in Rüsselsheim,

Germany, the new-generation i30 represents a further evolution of

the unique Hyundai form language,

‘luidic sculpture’ – the company’s distinctive design DNA – and offers

a choice of four engines with a

total of six power options and CO2

emissions below 100 g/km thanks to

an upgraded, super-eficient 1,6-litre diesel unit.

The new-generation i30 will go on sale in Europe early in 2012 as a

ive-door hatchback. The newcomer will be produced in Europe at the

company’s state-of-the-art manu-

facturing facility in Nošovice, Czech Republic.

Every new-generation i30 will be backed by the industry-best, fully-

transparent Five Year Triple Care warranty from Hyundai. This award-winning package provides ive years of unlimited-mileage warranty, ive years of roadside assistance, and

ive years of vehicle health checks.

A worthy successor to Hyun-

dai’s best-seller

The original i30 has deied the industry norm by recording

increased annual sales with each

passing year. Since launch in 2007, the i30 has recorded over 360.000

European sales, including more

than 115.000 units during 2010 – the highest-ever sales igure for an individual Hyundai model on sale in

Europe in one year, putting the i30 at six in the C-segment rankings.

Hyundai expects the new-gen-

eration i30 to maintain this growth trend, contributing to future sales

success, growing brand awareness

and improving perceptions

of Hyundai among European

consumers.

The fortunes of the new-gen-

eration i30 will also be helped by a recovering market. Industry analysts forecast the mainstream

C-segment will grow by 7% over the next three years, reaching sales

of 2,4 million vehicles per year by 2014. Hyundai is planning to sell on average over 120.000 units of the new i30 per year during the car’s lifecycle, capturing a larger market

share of around 5% and challenging established competitors.

Allan Rushforth, Senior Vice President and COO of Hyundai

Motor Europe, commented: “We

expect the new-generation i30 to play a signiicant role in developing our sales and brand image in Europe,

taking on the leading vehicles in the

C-segment and joining the all-new

i40 as a brand ambassador and quality benchmark for Hyundai.”

Style inspired by nature

The ‘luidic sculpture’ ethos utilises lowing lines inspired by nature and modern architecture to

give a constant three-dimension-

al presence to Hyundai vehicles.

Since its introduction on the Hyundai

ix-onic concept at the 2009 Geneva Motor Show, luidic sculpture has been the form language for all new

Hyundai models launched in Europe.

Thomas Bürkle, Chief Designer at Hyundai Motor Europe Technical

Centre, commented: “When

designing the new-generation i30, we used strong, luid lines to sculpt a car which looks athletic and exudes

a sense of constant motion, even

when stationary. We gave the car a bold stance, transmitting a conident attitude through sporty characteris-

tics and dynamic proportions. In this way, the car is very close to the

all-new i40, and the Hyundai design DNA is easy to recognise on these

models.”

The new-generation i30 also bears Hyundai’s signature frontal

feature – the hexagonal-shaped

grille.

“The hexagonal appearance

is unique to Hyundai, and deines the i30 as a family member. The jewel-like front headlamps which

lank the grille add a strong personality to the vehicle, as well as

a sense of reinement and luxury,” Thomas Bürkle added.

Apec CEO Summit 2011

26

Powering the new generation

The new-generation i30 will be available with a choice of three

gasoline and three diesel variants,

with power outputs ranging from

90 to 135 ps. Both fuel types play a signiicant role in the European C-segment, with diesel represent-

ing 52% and gasoline 43% of total sales. Overall, Hyundai is expecting a 50:50 split between diesel- and gasoline-powered i30 sales.

Hyundai believes that its highly-

eficient 1,6-liter variable geometry turbo (VGT) ‘U-II’ diesel unit will be the most popular engine in the range. Generating 128 ps at 4.000 rpm, the upgraded engine will accelerate the

new-generation i30 from standstill to 100 kph in 10.9 seconds, with a top speed of 197 kph.

The petrol engines, too, offer a

balance between performance and

economy. For example, the new-generation i30 can be speciied with Hyundai’s 1,6-liter ‘Gamma’ GDI (gasoline direct injection), a 1.591 cc unit that generates 135 ps and 164 Nm of torque.

Low emissions and real-world

eficiencyThe addition of technologies

developed under the company’s

Blue Drive™ sub-brand optimizes eficiency and lowers emissions for the new-generation i30. These include: Integrated Stop & Go (ISG), low-rolling resistance tyres and an

alternator management system. With CO2 emissions below 100 g/

km and an engine delivery of 128 ps, the 1,6-litre diesel new-generation

i30 will feature a best-in-class power to eficiency ratio.

Buyers will be offered a choice between manual and automatic

six-speed transmissions, with both

units providing a reined driving experience and enhanced fuel

eficiency.

Interior quality and equipment

from the class above

Cabin reinement and speciica-

tion on the new-generation i30 have been inspired by the high standards

of the all-new i40. Behind the wheel, for example, drivers beneit from Hyundai’s new Flex Steer™ option. With three operating modes – Comfort, Normal and Sport – the

system can be used to vary the level

of steering assistance and feedback

in order to suit driving conditions and

make the journey more pleasurable. A large TFT Supervision cluster is

available in the same quality found

on i40 – providing a wide range of essential information to the driver in

high-resolution clarity. Located in the centre console, the navigation

system is displayed via a 7-inch touch-screen.

The generous equipment levels

on the new-generation i30 will enhance the Hyundai experience for

passengers too. Dual-zone climate control will ensure a comfortable

environment for all occupants during

long journeys, and the addition

of a panoramic sunroof provides

increased natural light within the

cabin. The panoramic sunroof has been designed to open fully or tilt

open, offering passengers lexibility and functionality.

Customers will beneit from the new-generation i30’s roomier interior compared to the previous model. The overall length (4300 mm) and width (1780 mm) have been increased, while the height has been

reduced (1470 mm), generating sportier exterior proportions without

compromising functionality. Cargo capacity in the new-generation i30 is 378 liters with the rear seats upright – an increase of 10% compared to the original model.

Five-star safety features

The new-generation i30 features the latest active and passive safety

technologies to ensure maximum

protection for its occupants. Active safety features include ESP

(Electronic Stability Program), ABS (anti-lock braking system), VSM (Vehicle Stability Management) and Emergency Stop Signal. In terms of passive safety, the new-generation

i30 will be itted with six airbags as standard – front, side and curtain

- while a driver’s knee airbag is

optional.

The safety features available on

the new-generation i30 reinforce Hyundai’s excellent record on safety,

and the company anticipates the

new car will follow the outgoing

model in attaining the maximum

ive-star score in Euro NCAP’s impact assessment programme.

Driving leet growthSince going on sale in 2007, the

original i30 has played an important role in expanding Hyundai’s sales and

reputation in Europe’s leet sector. Hyundai expects the new-gener-

ation i30 to be even more popular with leet managers and company car drivers than its predecessor.

Targeting sales of over 120.000 units in Europe during a full year for

the new-generation i30, Hyundai forecasts approximately 50% of sales to come from the leet sector.

Five Year Triple Care will be a valuable point of differentiation for

the new-generation i30 in a highly competitive class. The ive-year warranty has no mileage limit,

roadside assistance is included for

ive years, and vehicle health checks are performed annually, providing

peace of mind for leet buyers and operators.

Compared to the original i30, total cost of ownership for the new-

generation model will be reduced,

helped by improved fuel eficiency, lower CO2 emissions and a lower

insurance classiication.


27

(Seoul, Korea) Hyundai Motor Company will donate a total of 10

mobile clinics to African nations

this year as part of the company’

s “Moving the World Together” Corporate Social Responsibil-

ity (CSR) initiative, which aims to contribute to society and be a better

corporate citizen. The mobile clinics will be used to provide basic medical

services to residents of impover-

ished and remote communities in

Africa.

The mobile clinics, composed of

a mobile internal medicine clinic and

a mobile digital X-ray clinic, are spe-

ciically tuned to run on tough road conditions in many African nations. Starting with Ethiopia, a total of 10

mobile clinics will be donated this

year to ive African nations (Ethiopia, Democratic Republic of the Congo,

Nigeria, Ghana and Rwanda). Each

country will receive two mobile

clinics -- the internal medicine clinic

and digital X-ray clinic. The clinics will be operated

in close partnership with the

Korea Foundation for International

Healthcare, local governments,

local clinics and NGOs. The Korea Foundation for International

Healthcare will provide consultation

and training on the operation of the

mobile clinics to local personnel.

To begin the initiative, Hyundai

handed over two customized mobile medical clinics to the Ethiopian

government at the Ethiopian

Federal Ministry of Health, in Addis

Ababa, the nation’s capital. The handover ceremony was attended

by Korea’s Minister of Foreign Affairs

& Trade, Mr. Kim Sung-Hwan; Korean Ambassador to the Federal

Democratic Republic of Ethiopia,

Mr. Chung Soonsuk; Minister of Ethiopian Federal Ministry of Health,

Dr. Tedros Adhanom; President of Hyundai Motor Company, Mr. Chung Jin-Haeng; and Chairman of Hyundai Marathon Motor Engineering, Mr. Haile Gebreselassie, as well as

media members and other guests.

To overcome challenging roads

in remote regions of many African

nations, the mobile clinics have been

developed on Hyundai’s four-wheel-

drive truck (HD120 chassis, GVW 12,520kg) to boost mobility with an engine displacement of 6,600

cubic centimeters. The truck has air suspension to protect delicate

medical equipment and operates

fully independently with its own

power.

The mobile clinics are self-

suficient hospitals. The mobile

Hyundai Motor Donates 10 Mobile Clinics to African Nations

- Starting with Ethiopia, Hyundai will offer 10 mobile clinics to ive African nations to provide free medical care to the underprivileged- Mobile internal medicine clinic and mobile digital X-ray clinic to provide in-depth medical examination and treatment

- Donation is part of Hyundai’s worldwide CSR initiatives


30

digital X-ray clinic is equipped with

a digital X-ray machine and remote

diagnostic systems. The mobile internal medicine clinic features

the latest medical devices, such as

digital ultrasonic and portable ECG

(electrocardiogram), can conduct basic medical tests, such as malaria

screening; and provide medical

supplies.

In addition to the donation of

vehicles, a total of 60 university

students from the Happy Move

Global Youth Volunteers program are engaging in volunteer activities

July 5 - 16 in Addis Ababa, Ethiopia. The services range from providing

free health care, in collabora-

tion with Open Doctors Society

of Korea, to installing communal

toilets to promoting a more hygienic

environment in partnership with

Habitat for Humanity International.

Starting with Ethiopia, Hyundai

Motor Company will send a total

of 500 Happy Move volunteers from July to August to less-de-

veloped areas in Thailand, Brazil, India and China. The volunteers will be engaged in various volunteer

programs such as environment

restoration and provision of medical

service.

REFERENCE The Happy Move Global Youth

Volunteers program is one of Hyundai Motor Company’s corporate social

responsibility programs. It seeks volunteers from Korean universities

to travel around the world to work

in areas related to the environment,

local welfare, medicine and culture.

Since its foundation in July 2008, Happy Move Global Youth Volunteers has sent 500 university student volunteers every summer

and winter to several countries,

including India, Brazil, China, Slovakia, Turkey, Egypt and the

Philippines.

From July to August of this year, volunteer students will spend about

two weeks in their assigned country

and work jointly with various NGOs,

including Open Doctors Society,

Habitat for Humanity International,

Food for the Hungry International,

International Workcamp Organiza-

tion, and Ecopeace Asia to alleviate

poverty, improve the health of

residents, protect the environment,

and strengthen local economies.

Among the projects, volunteers

will build a children library and

renovate a kindergarten in Thailand,

work to prevent desertiication of Inner Mongolia through the Hyundai

Green Zone Project, build houses

and provide free medical services

in India, and carry out cultural

exchange programs in Brazil.


31

Hyundai Motor Named One of World’s Top Global Green Brands of 2011

- No. 4 among automakers, beating BMW, Ford and Mercedes

Interbrand, the global brand

consultancy, ranked Hyundai

as one of the world’s greenest

brands, citing the automaker’s Blue Drive eco-friendly strategy and its

industry leadership in zero-emis-

sions hydrogen fuel-cell vehicle

development.

Interbrand ranked Hyundai 11th

among the agency’s 50 Best Global Green Brands, a new global report by the agency. Hyundai placed fourth among the seven automotive

brands that made the survey.

“The company is so conident in its fuel eficiency that starting this year it is reporting monthly leet fuel eficiency igures in the U.S.,” Interbrand wrote in the survey. “Hyundai has recently seen strong

improvements in energy, GHG

emissions, water, waste, and toxic

emissions.”

The survey, which questioned

more than 10,000 respondents in 10

countries, examined each company’s

environmental record and how the

company is perceived by consumers. Companies were judged based on

their performance, their environmen-

tal impact, their sustainable growth

strategy and their corporate social

responsibility programs.

Hyundai’s Blue Drive sub-brand, launched in 2008, encompasses all of the company’s eco-friendly

technologies and products that

contribute to higher fuel eficiency and lower emissions, including

gasoline, diesel, electric, hybrid and

hydrogen fuel-cell engines.

Hyundai rolled out the Avante

LPi hybrid in 2009 and the Sonata hybrid in 2011.

Hyundai plans to bring plug-in

hybrid vehicles to market soon, while

the company is currently operating

test leets of its hydrogen fuel-cell electric vehicles and pure-electric

vehicles, called BlueOn.


32

Hyundai Motor Signed MOU with Intel, C&S Technology To Develop

In-Vehicle Infotainment Solutions

Hyundai Motor Company signed

a Memorandum of Understanding

(MOU) with Intel Korea and C&S Technology, Ltd. to jointly develop solutions that provide both drivers

and passengers with enhanced

in-vehicle experiences such as lo-

cation-based and social network

services.

The signing ceremony was held

at the JW Marriott Hotel in Seoul, attended by Mr. Woong-Chul Yang, Vice Chairman at Hyundai Motor, Mr. Ton Steenman, Vice President and General Manager at Intel’s

Embedded and Communications

Group (ECG), and Mr. Dong-Jin Kim, Chairman and CEO of Seoul-based

C&S Technology.

“The demand for smart cars is

on the rise in Korea—a powerful IT country,” said Hyundai Vice Chairman Mr. Yang. “Hyundai will develop in-vehicle infotainment systems

that incorporate changes in digital

lifestyles and maximize customer convenience in cooperation with

Intel and C&S Technology.”

As part of the agreement, the

three companies will determine

product, technical and experiential

requirements for next generation

IVI platforms to be built in Hyundai Motor vehicles. They will jointly develop solutions based on the

Intel® Atom™ processor and the C&S Automotive IO Hub that

enable new, innovative services and

content to be offered to both drivers

and passengers in next-generation

IVI systems.

“Intel is working with automakers

and their suppliers around the world

to develop intelligent and connected

in-vehicle infotainment systems that

provide safer, more interactive and

personal experiences to drivers

and passengers,” said Hee-Sung

Lee, Country Manager of Intel

Korea. “Through our ongoing work with Hyundai Motor Company

and the new collaboration with

C&S Technology, we can develop

solutions that deliver this type of

experience.”

About Intel

Santa Clara-based Intel

(NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the

essential technologies that serve

as the foundation for the world’s

computing devices. Additional information about Intel is available

at www.intel.com/pressroom and blogs.intel.com.

About C&S Technology, Ltd.

C&S Technology specializes in automotive non-memory semicon-

ductors. Please go to www.cnstec.com for more information.

- Hyundai and Intel to develop In-vehicle Infotainment (IVI) systems based on the Intel® Atom™ processor


33

An Inside Look at the APEC Summit

By Dr. Ira Kasoff, former Deputy Assistant Secretary for Asia, U.S. Department of Commerce, International Trade Administration (ITA)

While discussions about debt have consumed

Washington, the As ia-Paci f ic Economic

Cooperation (APEC) forum has received little

attention. But U.S. businesses and trade oficials alike should pay close attention to this important

gathering hosted by the United States in Honolulu

this November.

APEC is the premier economic organization in the Asia-Paciic region, consisting of 21 economies—economies because it includes non-countries like Hong

Kong and Taiwan (for a full list of APEC members, see http://statistics.apec.org/). APEC members account for roughly half of world trade and two-thirds of the world’s

GDP. With a market of 2.7 billion consumers, APEC economies absorb some 58% of U.S. exports. Since its inception in November 1989, APEC has been the primary vehicle for advancing economic cooperation

and trade and investment liberalization in Asia. APEC is also important to the U.S. as it has been the only regional forum that meets at the leaders level that includes the

U.S. And for the irst time since 1993, the United States is hosting APEC.

APEC 2011. Over the years, APEC has evolved

into a year-long series of government discussions and

public-private meetings on a range of trade and invest-

ment-related subjects. This year the U.S. is hosting the most important of these events, which are grouped into

four clusters. The irst two have already taken place, in Washington, DC February 27 – March 12, and in Big Sky, Montana, May 7-21. Big Sky included a joint Meeting of APEC trade ministers and ministers responsible for

small and medium enterprises (SMEs), at which the ministers identiied the most signiicant barriers faced by SMEs, and pledged to “undertake speciic and concrete actions to address each of these barriers by the APEC

Economic Leaders’ Meeting in November 2011.”

The next cluster of meetings will be in San Francisco,

September 12 – 26. Among the many activities that will take place there, U.S. Secretary of State Hilary Clinton will chair an “APEC Women and the Economy” summit. There will also be a Transportation and Energy Ministerial Conference (on transport sustainability and eficiency), an Intellectual Property Rights Experts’ Group Meeting, and a number of other conferences and

panel discussions. Apec CEO Summit 2011

36

APEC - The Next 10 Years

By Hanna Trudo, Diplomatic Courier Washington Correspondent

The Asia Paciic Economic Cooperation (APEC), the leading trans Paciic forum that helped clean up the Asian Currency Crisis, among other trade and economic

cooperation initiatives, must reinforce economic

integration in the next 10 years in order to reach its trade

target for developing countries by 2020.

The goal for 2020 was set in November 1994 in Bogor, Indonesia, when political leaders from all 18 APEC countries including Australia, Canada, Chile,

Malaysia and the U.S., among others, agreed on the common principles of free and trade investment in the

Asia-Paciic region. The APEC Declaration of Common Resolve, commonly called the Bogor Declaration, outlines a long-term goal for developing economies to

be reached by 2020, and a shorter timetable of 2010 by

industrialized economies.

The annual APEC Leaders Meeting, which was

hosted in Indonesia and Singapore in recent years, and

regularly features heads of state and foreign ministers,

will be held this November in Honolulu, President

Obama’s hometown, and will be the irst time in 18 years that the U.S. has hosted the Summit.

Last year, at the Leaders Summit in Bogor, the vision for 2020 was aligned with reasonable economic

goals for the region: APEC leaders sought to remove

all barriers to trade and investment in developing

economies by the target date. The goal was to liberalize trade -- in policy and practice -- in the Asian-Paciic region to the fullest extent.

Accelerating regional economic integration (REI) and instituting a Free Trade Area of the Asia Paciic (FTAAP), according to APEC, has been one of the organization’s main priorities since 2007, and remains a key hinge of economic integration in next decade. In November 2010, The White House released a statement that addressed

the need to move FTAAP from an “aspirational to a more

concrete vision.”

The go-ahead from Washington to turn FTAAP

ideology into actionable steps stemmed from a call for

further scrutiny. At the 14th APEC Economic Leaders’ Meeting in Lima in 2008, oficials asked APEC to weigh FTAAP’s beneits against the challenges of promoting regional integration.

The following year, researchers from Australia,

China, Korea and New Zealand conducted a study to

comb through possible FTAAP roadblocks.

The 2009 indings, titled, Further Analytical Study on the Likely Economic Impact of an FTAAP, backed

by APEC in Singapore, concluded FTAAP possesses

“great potential to boost further economic growth in

the region.” That is, if liberalization and “trade facilita-

tion schemes and rules of origin standardization are embedded within.”

During the last two years, as countries continue to

waver in the shadows of the economic crisis’ overcast,

it imperative that APEC sets up a series of conidence building measures to keep all players onboard. In past summit meetings, APEC has over promised and

under delivered on its liberalization commitments. This time around, the 2020 trade vision cannot afford to be

clouded by a series of lackadaisical missteps.

At the Mexico Summit in 2002, for example, when

the aftermath of September 11 dispirited international

actors across the spectrum, Leaders said the WTO

meeting for the following year “had to be successful,” according to Alan Oxley, chairman of the Australian

APEC Study Centre, in a 2005 report titled, Reform of APEC. But Oxley said the Cancun Summit meeting was hardly a success, and was brushed off in light of more

positive gains -- something he said is normal in interna-

tional affairs, but “reveals the weakness of the claims by

trade oficials that commitments at APEC Summits are inluential in shaping developments in the WTO.”

The report also points out an “ill fated” attempt by APEC to adopt a program of voluntary trade liberal-

ization – supported by Australia and the US and New Zealand, among others -- that was addressed at the

Kuala Lumpur Summit in 1998.

The APEC region, albeit red-penned with marks

of past lapses, has a series of role-model examples of

successful plurilateral agreements to look towards, such

as the North American Free Trade Agreement (NAFTA), China-ASEAN Free Trade Agreement and Australia

– New Zealand Free Trade Agreement, that serve to

liberalize and facilitate trade.

But APEC playing copycat with already established agreements won’t work alone. As the Hawaiian summit in November approaches, the organization must acknowledge past promises that have gone unfulilled, and strive to be consistent and transparent with the WTO

in order to remain relevant and on track to achieving its

comprehensive 2020 plan for trade liberalization.


40

Asia Paciic Tourism Industry Deined by Rapid Changes

PATA, the leading voice and authority on travel and tourism in Asia Paciic, says the relentless rise of social media, mobile apps, low cost carriers and travelers from China and India are reshaping the face of tourism across the APEC region

On a recent Korean Air light from Honolulu to Seoul the cabin

was almost full. I assumed they were Korean. “Oh, no,” said the light attendant, smiling. “They are Chinese.”

The same story is increasingly

replicated across Asia Paciic and the world. According to the Paciic Asia Travel Association (PATA) China’s outbound travelers have

been increasing at an average rate

of 11.2% over the last ive years, India by 12.7%. PATA’s forecasts predict continued growth of 11.7% for China and 10.2% for India over the next two years.

In fact, China has been a savior

for many destinations in the region

formerly dependent on the US

market. As the US, European and Japanese economies continue to stutter, new generations of

inancially empowered Chinese, Indians, Russians and Indonesians

have stepped in to ill the gap.The result: the future of Asia

Paciic tourism industry is increas-

ingly looking to Asia for its new

growth. Not only has the US and Europe lost market share, PATA

believes they are unlikely to win it

back. As in geo-politics and many economic sectors, the future of

tourism is increasingly Asian, with a

strong Sino-Indian twist.“They may ly with low cost

airlines but once they arrive at their

destination they show a preference

for luxury resorts, brand name

shopping and exclusive tours,” notes Sabine Widmann, Chief

Sales Oficer, Indochina Services, a regional tour operator based in

Bangkok.Dr Matthew McDougall, CEO of

China-based Digital Jungle, puts it more starkly: “All destinations need

to radically adapt their entire tourism

ecosystem to accommodate the

Chinese.”PATA’s strategic intelligence

centre says low cost carriers,

evolving technology, especially

social media, mobile travel apps for

researching, booking and paying

for travel, shorter more frequent

holidays booked late, ageing demo-

graphics in rich countries, a younger

demographic of newly afluent urban middle class in emerging markets,

and a desire for ‘authentic’ travel experiences all now deine the Asia Paciic travel scene.

Rapidly growing and evolving

demand is good for business, but

tourism remains a sensitive sector. Excessive dependency on it is

dangerous. Economic downturns in source markets, terrorist strikes,

civil unrest, riots, disease outbreaks,

SARS, earthquakes, tsunamis and

loods in holiday destinations can and-do-wipe out years of gains.

Even in good times, without crisis,

destinations are often inconsistent on

where they position themselves on

the niche-mass continuum.Is more tourism better tourism?

There is a kaleidoscope of concerns,

especially on the supply side. Mass tourism concerns Klaus Lengefeld,

Sector Project Director at GIZ, the

German-government funded NGO

By Ken Scott, ScottAsia Communications


44

for sustainable growth.“I am concerned about the

enormous growth of outbound

tourism to Asia Paciic from China and India,” says Lengefeld, “and the fact that hardly any country has a

consistent strategy to organize this tourism in a way that balances the

expected huge economic beneits with the enormous risks and threats

to their natural, cultural and social

environment.”Lengefeld argues that destina-

tions need to develop and implement

“Carrying Capacity” and “Limits of Acceptable Change” models and procedures for attractions.

“We need to protect them from

destructive overuse,” says Lengefeld, “from Angkor Wat and Borobudur to the coral reefs of the Paciic and the Hawaiian volcanoes….”

Economically and administra-

tively developed destinations such as

the US, Canada, Japan, Singapore, Hong Kong and Australia are better

placed to put such safeguards in

place. Poorer destinations such as Cambodia, Laos, Nepal and

Myanmar, to name a few, often don’t

have the regulatory infrastructure,

training or inancial resources to enforce carrying capacity rules.

Best practice needs to be implemented at the small and me-

dium-sized business level as well as the government policy level,

says longstanding PATA member,

Scott Supernaw of Tauck Inc, a

Connecticut based travel agent. He argues that there should

be the development of forums,

educational seminars, best practice

examples and assistance for smaller

travel entities to participate in the

unprecedented growth of China

outbound travel.“The explosive growth of this

market should be an opportunity

for multiple levels of travel related

organizations in many countries. To date, very little seems to have been

done -- or is known -- as to how

to reasonably enter this apparently

lucrative market.”

Asia Paciic destinations are only now slowly realizing that to do well, hotel, airlines and tour operators

will have to better understand

what Chinese, Indian, Russian and

Indonesian travelers really want

while on holiday.Signage, menus, tour options,

entertainment choices, room

design, color schemes – even the

layout and design of whole resorts

– all need to be reviewed in order

for tourism companies to attract

and retain new emerging market

business.This comes at a time where the

travel industry is facing the challenge

of trying to reduce carbon emissions

and conduct tourism in a sustainable

way that respects host cultures and

the environment. Supernaw believes that while

eco-tourism and green policies are

important, basic travel and tourism

needs such as airport development,

security and customs eficiencies, the building of three- and four-star

hotels, and urban trafic controls all have to be provided too.

Tourism is expected to strike a

balance between modern eficiency, proitability and local cultural and en-

vironmental preservation. Basic human resource training

and educating host communities

what to expect from tourism is often

lacking, notably in less economi-


45

cally developed destinations where

tourism is often used as a crude

bulwark against poverty.“Governments, along with

industry, should prioritize measures focused on education and training in

order to prepare the local workforce

and the population-at-large for the

good and bad elements of tourism,” says Peter Semone, Chief Technical

Advisor for the Lao National Institute

of Tourism and Hospitality in

Vientiane, Laos. “Only with this knowledge and

human capacity can destinations

ward off the intrinsic environmental

and cultural risks association with

tourism and fully reap the economic

beneits,” says Semone.While sustainability and carrying

capacity issues are being debated,

technology changes are transform-

ing tourism.The marketing of tourism is now

being reshaped by social media,

tablets, apps for smart phones, user

preference trending and new media

distribution.International Data Corp reported

that the sales of smart phones

exceeded those of PCs for the irst time in history in Q4 2010. By 2014, industry watchers predict that there

will be more smart phones than PCs

in the world. The switch to online and mobile

already has profound implications

for travel. “The web is splintering into grooves, some of it is disappearing

into the cloud, most of it is ending up

in the hand of the individual,” says Yeoh Siew Hoon, founder of Web in Travel, a Singapore-based event

and discussion platform dedicated

to online marketing and distribution

in the travel industry.Siew Hoon says there’s a radical

shift in the way travelers plan, shop

around, buy and experience travel. It has a profound impact on the

way companies brand, market and

sell themselves and the way they

organize themselves around the new customer.

“Travel professionals, as

individuals, need to ask themselves

some hard questions. Am I stuck in the old groove? What’s a new groove I can jump to? What’s my groove? We need to hold our customers’ hands through this

change, help them make smarter

and better choices. We will need to hold our people’s hands through

this transition, creating new types

of companies and nurturing new

talent…”After 60 years’ of engagement

in Asia Paciic travel and tourism, PATA’s advice to companies is

two-fold. First, be ready to handle ever-increasing demand from

new Asian (and eventually Latin American) markets. As that demand rises, travelers will continue to

hungrily embrace new technology

that enhances their purchasing

power, choices and the quality

of the vacation on site. Second,

as demand rises, stakeholders in

tourism need to take more respon-

sibility to respect environmental

carrying capacities and the cultures

of host communities.PATA believes the rapid pace

of change in Asia Paciic travel and tourism will continue for the

foreseeable future.


46

Since its foundation in 1951 in Hawaii, PATA has led from the front as the leading voice and authority on travel and tourism in the Asia Paciic region

• In partnership with private and public sector members, PATA enhances the sustainable growth, value and quality of travel and tourism to-from-and-within, the region.

• The Association provides leadership and counsel on an individual and collective basis to over 80 government, state and city tourism bodies; nearly 50 international airlines, airports and cruise lines and many hundreds of travel industry companies across the Asia Paciic region and beyond.

• PATA’s Strategic Intelligence Centre (SIC) offers unrivalled data and insights including Asia Paciic inbound and outbound statistics, analyses and forecasts as well as in-depth reports on strategic tourism markets.

• PATA’s events are create millions of dollars of new business each year for its members.

• Thousands of travel professionals belong to over 40 active PATA chapters worldwide and participate in a wide range of PATA and industry events.

• The PATA Foundation contributes to the sustainable and responsible development of travel and tourism in Asia Paciic through the protection of the environment, the conservation of heritage and support for education.

PATA’s 2011 Priorities

On behalf of its members, PATA’s current strategic direction is to:

• Build the Business for members.

• Provide valuable insights, forecasts and analysis to help members make better business decisions.

• To take a lead position on travel industry issues that need to be addressed.

PATA moved its HQ from California to Bangkok, Thailand in 1998.

Further information and membership beneits: www.PATA.org.Apec CEO Summit 2011

48


51


52


53


54


55


56


57

The Women’s Century

By Chrisella Sagers, Diplomatic Courier Correspondent

The twenty-one member countries of the Asia-

Paciic Economic Conference produce 55 percent of the global gross domestic product. And yet, the APEC countries are missing out on billions of dollars in

potential productivity.

APEC economies are missing out on $47 billion in potential growth each year due to barriers or restrictions

on women’s participation. A lack of education opportu-

nities creates more loss in annual GDP growth, totaling

another $16 to $30 billion. A reduction of these barriers to women’s economic participation would increase the

annual gross domestic product of the United States by

9 percent; of the Eurozone by 12 percent; and of Japan by 16 percent.

Women entrepreneurs represent a powerful, yet

largely untapped market. Today, less than 10 percent of venture capital goes to companies with female

founders, despite studies that show women-owned

businesses offer a better return on investments and do

more to lift families and communities out of poverty and

cycles of violence.

Technology markets are especially suffering from

a lack of women’s participation. The heavily male-dominated ield is seen as dificult to nearly impossible for women to break into, due to degree programs and

corporate environments that do not offer women-friendly

environments or female mentors to guide young women

through. And this drastically affects the competitiveness of the world’s most innovative ield.

“It’s a business imperative to increase diversity,” said Marilyn Nagel, chief executive oficer of Watermark, a California-based, 4,000-member organization for pro-

fessional women, in an interview with Bloomberg. “A homogeneous team is not going to be as innovative and

is not going to produce the same level of well-thought-

out results as a diverse team.”

Leveraging the natural attributes and talents of

women worldwide begins with expanding opportuni-

ties for women entrepreneurs. Women have historically worked on the ground loor of industries such as textiles and agriculture throughout the APEC region. When these women have access to capital to start their own

businesses or reach management levels in a company,

they use their experiences to bring about industry-

changing innovations.

The growth of a female-owned business spreads

through the community. Women entrepreneurs are more likely to use their incomes to buy food and

educations for their children, raising community

health standards and productivity. They encourage and support other women, sharing their wealth of

knowledge; they understand what a community’s

living wage actually is, and provide that living wage to

their employees, spreading their success throughout

the community. This not only encourages increased community education efforts, but also brings new

perspectives from previously marginalized voices into the economic discourse, opens new markets, and

encourages economic vitality.

When leaders talk of encouraging entrepreneur-

ial activity, women should be the irst place they look. Because so little attention has been given to this group historically, eliminating barriers to women’s economic

activity could bring about a lurry of productivity. Barriers to women’s economic involvement include lack of education, lack of treatment for curable diseases,

and lack of access to capital. Leaders can address all of these issues, and if they are looking for the path to

economic recovery, they must.Apec CEO Summit 2011

60

APEC and U.S. Small Businesses: Let’s Strengthen this Prosperous Partnership

By Francisco J. Sánchez, U.S. Under Secretary of Commerce for International Trade

The APEC 2011 CEO Summit is about one

thing: opportunity.

This forum provides oficials — representing a diversity of interests and regions of the world — with a unique opportunity to exchange ideas, expand our

economic imagination, and, ultimately, strengthen the

ties that now bind us in this increasingly global business

climate. The 21st century economy is rapidly changing the way we work and live. Accordingly, we must all change with it because now, more than ever, we have

shared interests and a shared future. That’s why the Obama Administration is so pleased that the United

States is hosting APEC 2011.

Our viewpoint is simple: We recognize that the future of American commerce is closely linked with the

future of the Asia Paciic Economic region, the fastest growing economy in the world. The APEC region’s economy is dynamic and diverse. That’s why it’s no surprise that it represents approximately 60 percent of

all U.S. exports, an extraordinary number. Even more remarkable is that there are incredible opportunities to

do more in region, particularly for small and medium-

sized enterprises (SMEs).

Small and medium enterprises are, in many ways,

the heart of the U.S. economy; they represent more than 99 percent of all employer irms. They are home to more than half of all private sector employees, and they have

generated 65 percent of net new private sector jobs during the past 17 years.

In addition, those who run these businesses are

among the most talented and innovative entrepreneurs

in the world. They often drive the latest, cutting-edge products and services. That’s why the Obama Admin-

istration is so determined to give them an opportunity

to succeed, in large part by increasing their access to a

wide-range of international markets.

The Asia Paciic Economic region is at the top of that list.

Since the beginning of this year, a series of public-pri-

vate “road shows” have taken places across the country, helping to “spread the word” about APEC and what it does for business. We’ve talked about how APEC has helped slash tariff and non-tariff barriers between APEC

economies. We’ve highlighted the administration’s three priorities for APEC 2011: strengthening regional

economic integration and expanding trade, promoting


62

green growth and expanding regulatory cooperation

and advancing regulatory convergence. We’ve talked about our work with our APEC partners towards these

goals, whether it’s initiating APEC-wide green building

standards, agreeing to common medical device industry

ethics or helping SMEs beneit from cloud computing.

During these road shows, we’ve also highlighted

the tremendous opportunities the region offers SME

exporters, right now and in the future. That ties in well with the administration’s groundbreaking initiative to

generate healthy, robust economic activity. Last year, in his State of the Union Address, President Obama

announced the National Export Initiative (NEI), which has the ambitious goal of doubling U.S. exports by the end of 2014. Helping U.S. companies become more competitive internationally is a critical step to “winning

the future.” Of course, there have been previous efforts by the federal government to promote exports. What sets the NEI apart is that it is the irst time the United States has a Presidential-led, government-wide export

promotion strategy.

Since NEI was launched, we’ve tried to limit the red

tape and barriers that often make trade too dificult. U.S. companies, particularly SMEs, often face hurdles

when trying to close an export sale. This includes the lack of readily available information about exporting and

market research. Another challenge is obtaining export inancing. Tariff and non-tariff obstacles are also a very common problem. That’s why it’s critical that federal government gets involved and helps SMEs realize their full export potential.

The NEI works to improve trade advocacy and

export promotion efforts, while increasing SME access

to credit, removing trade barriers and pursuing policies

to promote strong, sustainable, and balanced growth. It also sends a powerful signal to the public about the

beneits of trade, and the value of keeping all markets open to new goods, services and ideas.

Right now, there isn’t a better counterweight to

protectionist interests and pressures than demonstrat-

ing how exports beneit business and the economy. APEC has been at the forefront of international efforts to

promote trade and open economies. Our stewardship of APEC this year fostered that agenda, providing all

interests with exciting, new opportunities.

Now, it’s time to seize them.

Francisco J. Sánchez is the Under Secretary

of Commerce for International Trade. He leads the

International Trade Administration, a federal agency

that promotes U.S. businesses and competiveness

with commercial offices across the United States and

the globe.

APEC SUMMIT


64

Drug-Resistant Tuberculosis

A Global Emergency

Requires an Innovative Response TB: A Global Overview

Tuberculosis (TB), often thought of as a disease of the past, continues to plague the world’s most vulnerable people. The World Health Organiza-tion (WHO) estimates there were 9.4 million new cases of TB globally in 2009; in the same year, 1.7 million people died of TB – equal to about 4,700 deaths each day.

The WHO estimates that of all new TB cases in 2009, about 3.3 percent of these were the drug-re-sistant form of TB, called multidrug-resistant tuberculosis, or MDR-TB. These indings by the WHO mark the highest rates ever of MDR-TB. In some settings in the former Soviet Union, these rates peaked at about 28% of new TB cases.

These dire statistics are even more dismal considering that TB and MDR-TB are treatable and curable. The real problem lies in the fact that TB – in all its forms – is a complex disease, one which is not only a medical problem; it is also a social and economic problem.

A Multi-Pronged Approach to

MDR-TBThe Lilly MDR-TB Partnership

is a public-private initiative that encompasses global health and relief organizations, academic insti-tutions and private companies, and is led by Eli Lilly and Company. Its mission is to address the expanding crisis of MDR-TB. Created in 2003 to address the growing challenge of MDR-TB, the Partnership has adopted a 360-degree approach, and mobilizes over 25 global healthcare partners on ive continents to share resources and knowledge to confront TB and MDR-TB.

To drive the Partnership, Lilly is contributing US$ 120 million in cash, medicines, advocacy tools and technology to focus global resources on prevention, diagnosis

and treatment of patients with MDR-TB; and an additional US$ 15 million to the Lilly TB Drug Discovery Initiative to accelerate the discovery of new drugs to treat TB.

Empowering Local Communities

In order to prevent the spread of the disease and effectively care for those infected, the Lilly MDR-TB Partnership has implemented com-munity-level programmes to raise awareness about MDR-TB, increase access to treatment, ensure correct completion of treatment and empower patients by eliminating the stigma of the disease in communities and workplaces.

The Partnership also trains healthcare workers to recognize, treat, monitor and prevent the further spread of MDR-TB. These training materials and courses have been designed to ensure that the knowledge learned is passed on to peers, furthering the quality of patient care.

A Global Approach for Global

ResultsWhile community and country-

based activities empower local populations to ight MDR-TB, global change requires a global view. With this in mind, the Partnership works with policymakers to raise awareness about the toll that TB takes on the global population and encourages new initiatives that curb the spread of MDR-TB. Additionally, the Partnership promotes adherence to the World Health Organization’s standards on TB treatment and supports national TB programs that have been developed using these standards.

Sustainable Access

to Medicines

One of Lilly’s many goals is to increase the supply of high-quality, affordable medicines to the people who need them most. To do this, Lilly has partnered with manufacturers in countries hardest hit by MDR-TB, providing both

knowledge and inancial assistance to create sustainable, local sources for MDR-TB drugs. These locally produced drugs enable access to medicines at affordable prices for MDR-TB patients, while supporting local economies and ensuring high-quality manufacturing.

New Drug Discovery Initiative

While access to medicine and care help patients signiicantly, MDR-TB treatment remains a long, isolated process. To encourage patients to complete treatment and avoid even more drug-resis-tant strains of TB, research and development are necessary to discover faster-acting medicines. To address this need, Lilly has created the Lilly TB Drug Discovery Initiative, which is a not-for-proit public-pri-vate partnership that will draw on the global resources of its partners, including medicinal libraries donated by Lilly, to pioneer research.

A Public-Private Partnership for

Those in Need

Lilly and its Partners work together closely, sharing knowledge, expertise and research in the quest to contain and conquer MDR-TB, a disease that disproportionately affects impoverished populations. The initiatives of the Lilly MDR-TB Partnership all have one thing in common: improved care for some of the world’s most vulnerable people, delivered in a manner that is sustainable and builds capacity within the communities where it is needed most.

www.lillymdr-tb.comEmail: [email protected]

Phone: +41 22 306 0333

Advertisement


66


67

Universities: Crucial Partners in Meeting the Challenges of the 21st Century

By Michael K. Young, President, University of Washington

The last ifty years brought tremendous changes in the global economy, including shifts from the industrial

age to the information age, and from the Atlantic to

the Paciic. Dynamic economic growth also led to the emergence of new global concerns such as energy

deiciency and food and health security. Meeting these and other challenges requires new knowledge and

expertise that universities can provide, making them

crucial anchors for sustaining and increasing regional

economic development. Taking into account the emerging challenges of the 21st century, universities are

evolving to meet these demands and expectations.

The American university model of fostering basic

science research has been a successful framework that

some economies have sought to adapt in addressing

national social-economic needs. Two areas in particular have contributed to the critical role American research uni-

versities play in the US economy: the role of government

in advancing world-class research and university-industry

partnerships that lead to economic development.

Thirty Years After Bayh-Dole

In the last six decades, American higher education

and federal research funding agencies have created a

successful collaboration in advancing basic science

research in their broader mission to generate and

disseminate new knowledge effectively as a public good. It became the obligation of the federal government to

sustain vital funding for basic science research while

resources for applied research and development were

mainly provided through the private sector. American federal funding for research and development since

the 1930’s has grown almost tenfold – to nearly $150 billion in 2010. In addition, the Bayh-Dole Act, federal legislation passed in 1980, enabled universi-ties to have broader scope and exclusive patent rights

of their inventions and intellectual property resulting

from federally funded research. The core of this policy was to stimulate US competitiveness and to revitalize a sagging industrial sector. It also paved the way for academic research and innovation to integrate

with private sector industry in the development of

new products and processes. This has led to other countries adopting versions of the Bayh-Dole Act for their own government funded research. Today, there are over two hundred ofices for commercialization and technology transfer located at US universities, and

a comparable increasing number of ofices abroad. This will provide more opportunities for university to

university research cooperation, as well as university to

industry collaboration across borders.

University-Industry Cooperation

The urgency to ind solutions to human health, and to advance information technologies and materials

science research has helped develop thriving university-

industry research programs. Apec CEO Summit 2011

68

National priorities in biomedical research have

inluenced the translation of research between universi-ties and major pharmaceutical entities. Industries have also helped universities focus on the areas of technology

and applications needed, enhancing the capacity for

researchers to move discoveries from the laboratory to

the marketplace with greater eficiency.

University-industry cooperation has also evolved into

new collaborative arenas creating corridors of industry,

with small to medium enterprises and non-proit organi-zations adjacent to university communities. Since the success of Silicon Valley, many localities around the world are trying to replicate it by providing venture capital or in-

frastructure, from roads to universities. However, what is harder to replicate is the culture that deined Silicon Valley: the room to experiment and fail, the informal networks, the feeling that anything is possible.

The University of Washington, which ranks irst among public universities in federally-funded research,

much of it in the bio-medical sciences, is an economic

engine that generates $9 billion in annual economic impact for the state of Washington. This has translated to an array of companies in the area doing related

research, with more than 250 companies created from university-based research. The presence of Microsoft and other technology companies in the area has also

produced a dynamic interface between the ields of medicine and computer science technology. While some corporations locate their labs in close proximity

to university campuses, the expense of maintaining

independent labs is costly for many small to medium

sized businesses. Perhaps the greatest outcome of venture clusters has been the spawning of small

start-ups that were born from dorm rooms and garages,

not from corporations. The beneits from this fusion of activities are highly networked and diverse communities

of skilled and loyal participants.

Today, research universities are global institutions

that help to disseminate knowledge and drive economic

capacity. New multidisciplinary ields and innovations in global health and environmental sustainability are

bringing a critical mass of researchers, social scientists,

and practitioners together.

To address these issues, universities are becoming

more entrepreneurial and responsive to the demands

of their communities and serve as vital incubators of

knowledge and innovation. But they need consistent and reliable funding support. Diverse partnerships

must be collectively formed and clusters of economic

interests and strengths need to be strategically identiied and developed in cooperation with university-communi-

ty infrastructure.

As economies in East Asia continue to expand,

American higher education faces the prospect of losing

its competitive leadership in research and development. We are not producing nearly enough scientists and

engineers compared to our counterparts. But our educational system has encouraged a culture of inquiry

and curiosity that has produced a unique mass of critical

thinkers and entrepreneurs, a tremendous advantage

for the US in generating knowledge and innovation. Our decentralized educational system facilitates mobility, diversity, and increased access to higher education. At the heart of our mission, though, are our students, who

are being educated to be well equipped to understand

multiple perspectives and how to link sectors and

pursue ideas.

All countries beneit from the increasing number and diversity of talented individuals that education and

industry bring to our communities. Competition among universities and communities are healthy opportunities to

raise standards of living, education and growth. Univer-sities are critical to economic competitiveness, and we

must link our sectors and bring communities together

to invest in our future. Perhaps the greatest contribu-

tion that universities provide to society is the beneit of a global infrastructure of knowledge that continues to

advance a greater common good.

Michael K. Young became pres ident of

the University of

Washington on July

1, 2011. Also a

Professor of Law,

President Young has

a distinguished record

as an academic leader

with broad experience

in public service and

diplomacy. Prior to

that, President Young

served as Deputy Under

Secretary for Economic

and Agricultural Affairs

and Ambassador for

Trade and Environ-

mental Affairs in the Department of State under the

presidency of the irst President Bush. Apec CEO Summit 2011

69

The City of the Future

By Chrisella Sagers, Diplomatic Courier Correspondent

It is a human pastime to dream up conceptual

cities of the future. From homes that ly above the city to escape smog to gigantic ships that serve as extra-

terrestrial cities, our popular culture is full of ideas for

the future.

However, we face today an interesting opportunity. Our economy is experiencing an upheaval on the scale

of the Industrial Revolution, and we are witnessing the

complete reshaping of economic and social structures

into something new. As during all such restructurings of society, the transition phase is marked by widespread

business failures, unemployment for those trained in

obsolete professions, and a movement out of the cities

too closely deined by the old economic structure.

Increasing globalization has meant that those who do not innovate or diversify, die. Take, for example, Detroit. The city tied itself to the automobile and the assembly line, failing to plan for the day when manu-

facturing would no longer be done in the United States

and the assembly line would be made obsolete by the

Technology Revolution, thereby failing to give itself a

backup plan. What will it take for the cities of the future to avoid Detroit’s fate?

Globalization means that not only countries, but provinces and cities themselves must be able to compete

in a cutthroat business world. Cities have to be able to attract educated workers and companies to employ

them, through a combination of public spaces and in-

frastructure; laws favoring business and ordinances

promoting entertainment; networks for family support

and dating scenes; networking and logistics.

A high-ranking employee – in a company coerced

to move to a city with low taxes and good infrastructure

– must be able to get to the airport easily and eficiently to seal deals with clients face-to-face, but then have

access to high-speed internet once back home in order

to manage those deals. She must be able to have access to child care services while she works, just as much as

her young entry-level employee must be able to take

his new girlfriend out somewhere interesting after work

if their new family is to be convinced to stay in the city. Businesses themselves must be able to connect with local resources and labor as much as global markets

and opportunities; these require strong business as-

sociations and civil society groups at home, as well as

bleeding-edge telecommunications infrastructure and

modern airports capable of heavy trafic.

Approaching all these challenges will require a

massive urban planning effort that re-conceptualizes

the public-private partnership. The city of Raleigh, North Carolina is on the forefront of this effort. As one of the three corners of the region’s Tech Triangle, one would

expect that industry-shaping ideas would emerge from

here; however, one of the more remarkable innovations

from the city has been the use of open-source information

and crowdsourcing feedback to gain insights into the

redesign of downtown Raleigh.

In an interview with OpenSource.com, David Diaz, president and CEO of the Downtown Raleigh Alliance,

explains why this approach was so valuable to the

downtown revitalization effort: “The people that were the most passionate had the hardest time stepping away

from it and couldn’t give us the insights that we eventually

uncovered. The person with a loose association [to downtown] gave us better insight. This was an ah-ha moment. If you only involve the advocates, you don’t get the broader view. Participation from all made the information better.”

This is a public-private partnership in a completely

new sense, with ideas passing from city planners to

the general public and businesses and back again,

creating a more informative feedback loop that,

should governments choose to listen, will bring about

better solutions to problems that affect everyone and

better cities.

And what fortuitous timing. In the next decade, it is expected that nearly 70 percent of the world’s population will live in urban areas. The city of the future will be one that will harness all of its resources, including

the collective knowledge of its population, successfully

in order to compete at the global level. For in today’s globalized world, the only mantra is, “Think global, act local… or else.”


70

Yoshihiko Noda’s Vision for Japan

By Hanna Trudo, Diplomatic Courier Correspondent

Newly sworn in Prime Minister Yoshihiko Noda, the former inance minister of Japan, might take solace in the old Japanese proverb, Money grows on the tree of persistence.

But persistence, as the proverb fails to point out, does not trump inadequacy in the face of natural,

political and economic disasters.

A new maxim, Fresh leadership grows from the

broken branches of catastrophe, might be more

applicable to Japan today.

The past ive leaders to cyclone through the country since 2006 have added to the already quaked national

morale by making promises they could not keep,

and scalding leader after leader with burdens of past

mistakes.

Yoshihiko Noda, the 54-year-old Prime Minister number six, stepped in with a cup-half-full -- though

chipped, and illed with luke warm expectations -- approach to mitigate the aftermath of the 9.0 magnitude earthquake, tsunami and nuclear meltdown in March.

But Japan, an essential arm of the APEC community, might need something stronger – an unbreakable prime

minister who exudes mirror-speech conidence, not self-deprecatory quips of mediocrity.

The iscally conservative leader must work against the grain of his in-and-out predecessors, and leverage

his economic capabilities and past successes, to secure

the longevity needed to promote political, economic and

environmental reconstructive efforts.

The odds are stacked against him, but someone

who under promises – a change from the tactics of past

politicians – might be what Japan needs to overcome the inherited economic and nuclear challenges to come.

The leadership opportunities are there, despite a

national debt that swells two times larger than the size of the economy, or the dispersed Northeastern region

that suffered the worst damages since World War II. But it’s up to the Democratic Party of Japan (DPJ) prime minister to choose adversity-triumph over low barometer

expectations.

Prime Minister Noda’s predecessor, Naoto Kan,

the DPJ leader who was in ofice for just 15 months, eventually ran out of get-out-of-March 11-disaster-free

cards. Some media reported he made unprecedented, intensive relief efforts – he was broadcast on television

wearing the same work clothes as Japanese engineers – but others reported widespread dissatisfaction, and

said his low approval ratings were directly linked to his

even lower responsiveness to disaster’s calamitous call.

In May, just a few months before former Prime

Minster Kan stepped down, Japan donated $640,000 to help stimulate the Asian-Paciic economy – a con-

tribution to the APEC Support Fund (ASF), started in 2004, that demonstrated lasting commitment to the region, despite devastating national circumstances.

During a meeting at the UN General Assembly on

Sept. 21 in New York, Prime Minister Noda picked up the conversation as the new leader six months after the

disasters – with the economy and relief efforts in the

forefront. At the General Assembly, the prime minister said the Fukushima Daiichi nuclear plant’s reactors

would be shutdown within a year, according to a White

House press release. The prime minister also said he will hold a conference in 2012 with the International

Atomic Energy Agency (IAEA) to analyze and discuss key takeaways from the meltdown.

If the Fukushima disaster is any indication of policies

and preventative measures to come, Prime Minister

Noda’s tenure will inevitably include nuclear safety

reform as a top agenda item.

He committed to working alongside the U.S. and other allies, and with the IAEA, to assume a leadership

role in meltdown responsiveness and prevention, and on

nonproliferation and national security efforts.

The former inance minister has a lot to do with little support or self-conidence. His commitment to Japan, and to the international community, will be tested by his

willingness to stimulate the APEC Support Fund, among

other regional initiatives, as he navigates into his irst months as the post-disaster prime minister.


72

Building an Innovation EcosystemBy Deb Henretta, Group President – Asia, Procter & Gamble

P&G has a long history of innovation. Be it our iconic brands like Pampers, Tide, Olay, and SK-II or

our processes and systems, like the introduction of

brand management and data based market research,

P&G has a deep track-record of innovation leadership

that has guided and sustained our Company’s success

since its establishment in 1837. For P&G, innovation is our lifeblood.

In general, whenever one talks about innovation

there is an esoteric and mysterious air about it. People imagine scientists in lab coats closeted away for

years behind their test tubes and microscopes, before

emerging triumphantly in an eureka moment. Yes, innovation is about discoveries and breakthroughs, but

when you are committed to touching and improving

lives – over 4 billion of them – everyday, you need to go beyond inventions and create an infrastructure that

delivers reliable, repeatable innovation that can make a

meaningful difference to the lives of our consumers. The irst step in this process is to deine innovation holisti-

cally; we strive to foster an innovation culture that leads

not just to product or technological innovation but also

to innovation in people practices for example.

At P&G we irmly believe that you can design to innovate. We have made sustained investments, each

deliberate and choiceful, in building a robust innovation

ecosystem that does just that. In fact, we invest more in innovation than any other company in our industry

- nearly US$2 billion in 2010. We invest at least $400 million in foundational consumer research to discover

opportunities for innovation, conducting some 20,000

studies involving more than 5 million consumers in nearly 100 countries.

But while inancial investment in R&D is important, they are only one, albeit important, aspect of the

innovation process. There are 5 other considerations that I think organizations should keep in mind as they design to innovate:

I. COLLABORATELike in the natural ecosystem, no single actor

creates an innovation in isolation. We deliver successful innovations through creating a robust network with

extensive internal and external partnerships. Our Connect+Develop open innovation model was spe-

ciically created for this purpose. We collaborate with nearly 2 million potential innovators externally, spanning

SMEs, individual inventors, and academic institutions. Successes such as Olay Regenerist, Dawn Hand

Renewal and Tide Totalcare are just a few examples of

this collaborative process


78

II. BUILD THE BASE

We believe that innovative new growth efforts

depend on a healthy core business. First, a healthy core business produces cash low that can be invested in new growth. Second, a core business is rich with ca-

pabilities that can support new growth efforts. Break-

through innovation needs time and patience; a robust

innovation architecture must therefore build off a strong

base business.

III. INNOVATE ACROSS THE PORTFOLIONot all innovations are alike. At P&G we plan for

balanced innovation portfolio that includes what we call

“disruptive market innovations” - these are the big bang breakthroughs that create new categories and new

market segments. But as we all know, these innovations come along once in several years, sometimes as much

as a decade or more. To ensure that the innovation portfolio doesn’t dry up, companies need to make sure

that they also invest in innovations that improve upon

existing innovations. Even within this type of innovation, some will be more transformational than others. Another type of innovation that we focus on and is a key source of

growth are what we call “commercial innovations”. These are innovations that reframe or redeine existing proposi-tions with new ideas. For example, P&G’s sponsorship of the Olympic games, takes the core beneit of several of our brands – of serving women, many of whom are

mothers, by making their lives a little easier, a little better

- and ties it to a larger idea of “thanking mums”. Our Vancouver Winter Games experience, where we irst rolled out our Thank You Mum campaign was a great success and we are now looking forward to thanking

mums across the world through a ten year partnership

with the Olympics.

IV. THINK BIG, START SMALL, ACT NOWIt is important to keep in mind that an innovation

ecosystem doesn’t build itself overnight. Innovation efforts typically start out small – as pilots where you

spend little and learn a lot. I have seen many big ideas coming out of 2 day workshops that have subsequently

been expanded to larger pilots in several business units

and then into a company-wide initiative. Such staged investment allows for early rapid revision, targeted ex-

perimentation and provides a built in reminder that

innovation is not a quick ix.

V.GET THE RIGHT TEAMInnovation needs fresh eyes and free minds. It is

important to staff innovation projects with teams that are

small and unencumbered by the usual processes, as it

may kill off nascent ideas. It is also important to ensure that there is a mix of young and more senior people on

the team, so that decisions can be taken swiftly and

barriers busted. Such teams are better able to focus on the most promising initiatives and make sound judgment

calls when data is inconclusive or absent.

As a company committed to touching and

improving lives, P&G needs to constantly – and con-

sistently – create innovations that serve unmet and

under-met needs. These 5 considerations go a long way in helping us build an innovation ecosystem that

improves lives of more consumers in more parts of the

world more completely.

GREEN INNOVATION


80

Building a Sustainable Environment for Growth and Prosperity in APECBy Richard P. Lavin, Caterpillar Inc., Group President

For more than 85 years, Caterpillar has been making sustainable progress possible and driving positive

change on every continent. We are the world’s leading manufacturer of construction and mining equipment,

diesel and natural gas engines, industrial gas turbines

and diesel electric locomotives. The company is also a leading services provider through Caterpillar Financial

Services, Caterpillar Remanufacturing Services,

Caterpillar Logistics Services and Progress Rail Services.

Our vision is a world in which all people’s basic re-

quirements, such as shelter, clean water, sanitation and

reliable power, are fulilled in a way that sustains the environment. Our mission is to enable economic growth through infrastructure and energy development, and to

provide solutions that protect people and preserve the

planet. Our strategy is depicted as follows:

Our deinition of sustainable development is to leverage technology and innovation to increase eficiency and productivity with less impact on the environment

and to help customers do the same.

Focusing on sustainable development is good

business. And done right it’s a formidable competitive advantage. In the next decade, the most successful companies will be those that integrate sustainability into

their core businesses while enabling their customers to

work more safely and eficiently. We’re already doing that at Caterpillar and helping our customers do the same — looking out for the environment and the bottom line.

Caterpillar customers are in industries at the heart of

many of the world’s sustainable development challenges,

including infrastructure development, mining, oil and


82

gas, power generation, forestry and transportation. That’s why a focus on sustainability is so important to us. In fact, some of Caterpillar’s fastest-growing businesses

are those focused on the sustainability of materials and

resources.

On the energy side, Caterpillar supplies highly

eficient power systems and energy solutions. We provide engines that support alternative energy

sources, converting biogas such as landill gas, coal seam methane and digester gas into useful and clean

energy. To help customers with energy eficiency and productivity, we lower the environment impact, while

reducing the running cost for customers in the lifetime

of the products.

On the materials side, our greatest contribution to

materials conservation comes through our remanu-

facturing business. This advanced form of recycling takes end-of-life products and restores them to original

engineering speciications. The process reduces waste and consumption of raw materials to produce new

parts. And the end result is a high-quality, cost-effective repair option for customers. In 2010, Cat Reman and Progress Rail together recycled approximately 3 billion pounds of material.

Caterpillar feels a responsibility to contribute to

public debate on energy and environmental policies

that affect our industries. Sustainability is a bit of a balancing act. We need clean, secure, and competi-tively priced sources of energy, and ever increasing

amounts of natural resources. Thus, we have to address environmental concerns. At the same time, we cannot undermine our economic well-being. Instead of placing heavy regulations and expenses on businesses,

governments need to drive private sector investment

in energy solutions with more incentives and support. Accordingly, we strongly endorse the APEC Business Advisory Council’s (ABAC) recommendation in this year’s Letter to Leaders to reduce or eliminate tariff and

non-tariff barriers on environmental goods and services.

Climate and energy concerns are global issues. Each country has its own unique role to play, but we have to

keep a level playing ield. As air knows no boundaries, coordinated global actions are the only effective ways

to meet the world’s environmental challenges. Drastic variations in rules and regulations can bring huge dis-

advantages for businesses, industries and even nations. As a result, we are pleased that ABAC has identiied Regulatory Coherence as a next generation trade issue

in the Letter to Leaders, and recommended a focused

effort to harmonize diesel engine emissions regulations.

The greatest opportunity to create a sustainable

environment for growth and trade lies in promoting free

trade. Caterpillar has long believed that the pursuit of business excellence in a climate of free enterprise free

trade and unencumbered competition is the best means

for eficient development and distribution of goods and services. The enormous rise in post-World War II gross national product and living standards in countries par-

ticipating signiicantly in international commerce has demonstrated such beneits. Accordingly, we support initiatives aimed at increasing economic development. APEC Leaders have a shared vision to achieve a Free

Trade Area for Asia Paciic. We encourage APEC Leaders to set a deinitive target to achieve this vision and work together with the private sector to make it a

reality.

ENVIRONMENT & SUSTAINABILITY

Non-tariff barriers

in APEC hinder

trade in remanu-

factured products

and services

World’s First Electric

Drive Track-Type Tractor


84

Creating a Common Commercial Environment in Asia and the PaciicBy Grant Aldonas

As APEC’s leaders prepare to meet in Hawaii,

there would seem little cause for optimism. The world economy is slowing. Trade talks in the World Trade Organization have ground to a halt. Trade frictions are once again on the rise.

All of which suggests dim prospects for deepening

economic integration in Asia and the Paciic. Yet, deeper integration is essential both to the region and to

the contribution it makes to economic recovery globally.

Two trends have driven the region’s success over

the past three decades. One is the increasing reliance on institutions like private property, contract rights, and

markets as the organizing principles of the region’s economies, which accounts for much of the progress

in reducing poverty and raising living standards. The other is integration, both regionally and as part of the

global economy, which has expanded the opportunities

for specialization, raised the region’s productivity, and allowed irms to position themselves at different stages in a powerful regional value chain serving global markets.

The rhetorical support for further liberalization at recent APEC leaders’ meetings acknowledges the

role integration has played in the region’s progress. But,

that rhetoric belies a number of trends that threaten

its success. They include a disregard for intellectual property rights, conditions on investment that force irms to relinquish their intellectual property as a condition of

market access, and a suite of industrial policies intended

to foster local production at the expense of deeper

regional economic integration.

Those trends threaten the region’s prosperity in two

ways. By adopting policies that segment the region and isolate it from the global economy, governments

are moving away from the path that led to Asia and the

Paciic’s current prosperity. By weakening property and contract rights, they diminish the proits earned through technological innovation in the region, which is key to its

future growth and diversiication.

There is, fortunately, an alternative that would

reinforce, rather than weaken, Asia and the Pacific’s

upward trajectory. That alternative involves a commitment by APEC leaders to deeper economic

integration – not simply trade and investment liber-

alization as conventionally defined, but the creation of a common commercial environment that solidifies

the legal and institutional underpinning of a regional

market economy.Apec CEO Summit 2011

86

The reason for moving powerfully in that direction

is globalization’s impact on how businesses are organized and how they compete. By sharply reducing transaction costs, globalization has reduced the need for vertical integration, allowing the shift toward global

supply chains and, at the same time, making them a

competitive necessity. By expanding opportunities for specialization and trade, globalization has increased the return to those factors of production that allow irms to exploit those opportunities, which has made access to

capital, talent and ideas the new basis of commercial

competition.

What that suggests in terms of deeper integration

is a need to focus on making the region as attractive as

possible to investment by irms that mobilize the capital, talent and ideas and organize the value chains that serve global consumer markets. That will require lowering transaction costs, reducing uncertainty and risk in the

business environment, and rewarding innovation and

entrepreneurial investment.

In concrete terms, that calls for strengthening

property rights (particularly intellectual property rights), ensuring the enforceability of contracts, improving the

eficiency of capital markets, and guaranteeing the contestability of markets for goods, services and ideas

across the region. In short, policymakers should aim to create a frictionless legal environment throughout

Asia and the Paciic that encourages commerce and, hence, investment.

That approach holds promise for three reasons. First, it takes the world economy as it is – one in which

the majority of trade now takes place between afiliates of globally engaged irms or within the broader reach of their supply chains – and creates an environment in

which such irms can lourish, stimulating local innovation and entrepreneurial activity through their investments.

Second, the approach outlined is a natural extension

of the policies that have driven the region’s rapid

economic progress to date and of what APEC does

best, which involves the practical work of improving the

business environment and reducing transaction costs

that might otherwise inhibit commerce.

Third, the effort to create a common commercial

environment creates a process in which every nation in

the region has a stake, yielding a positive sum outcome

that often eludes conventional trade negotiations.

The role for APEC’s business leaders in that process

is critical, both in educating political leaders on the

reasons for creating a common commercial environment

and in identifying the rules and economic institu-

tions that will lead to that goal and foster investment

and innovation in the process. With that goal in mind, APEC’s business leaders should press APEC leaders for

the following in Hawaii:

1) A strategic vision for economic integration in Asia and the Paciic that focuses on innovation, entre-

preneurial investment, and economic growth;

2) A practical work program to establish the intel-lectual foundation for creating a common commercial

environment in Asia and the Paciic and a process for getting there; and

3) A counterpart proposal on trade and investment liberalization that would put APEC on a concrete path to free trade by 2020, as the Bogor goals require, which would parallel and reinforce the effort to create a friction-

less legal environment throughout the region.

The future of the region and the global economy will

be measurably brighter if they do.

APEC & COMMERCE


88

RIU Hotels & Resorts in Los Cabos Where meetings combine with pleasure

Los Cabos, located in tip of the

Baja California peninsula in Mexico, is one of the most beautiful and

exclusive destinations in Mexico. Thanks to its exceptional attractions

as the beautiful beach sceneries, a

varied life of leisure, water sports

and the sight of gray whales, one

of the most spectacular natural

sights in the destination, RIU Hotels

& Resorts opted for this exotic

destination 7 years ago, opening its irst hotel in Los Cabos: the Riu Palace Cabo San Lucas.

With over 55 years of experience, RIU Hotels & Resorts has been dis-

tinguished for its prestigious All-

inclusive program and excellent

service in more than 100 hotels

in 19 countries around the world, highlighting its excellent location

in paradisaical beach destinations. In Los Cabos, the hotel chain has

two incredible 24 Hours All Inclusive resorts which can be an ideal choice

for holding all kinds of events, the

Riu Palace Cabo San Lucas and Riu

Santa Fe, which are located just 3.5 kilometres from downtown Cabo

San Lucas.

The elegant Riu Palace Cabo

San Lucas belongs to the most so-

phisticated range of the hotel chain,

the RIU Palace and is the best option

for the most demanding clientele. The luxurious hotel, which features

642 junior suites and suites, offers an elegant palatial architecture with

sophisticated decor and beautiful

facilities, 24 hour room service, several swimming pools for adults

and children, live entertainment

shows, water sports, spa, a wide

gastronomic offer and the Krystal

Restaurant, that combines the latest

concepts of avant-garde fusion

cuisine. For events, the Riu Palace Cabo San Lucas has a conference

room with a capacity for up 300 people and a professional RIU team

that will meet and exceed the needs

of groups and conventions.

Next to the luxurious Riu Palace

Cabo San Lucas is the Riu Santa Fe

hotel. This 5-star resort is perfect for families and groups as it offers a

great entertainment program during

the day and night, ine cuisine in its ive restaurants and six bars, three of which are located in the pools,

a itness center, Pacha nightclub, tennis courts, and the Renova Spa. For events, the Riu Santa Fe offers a

large conference room with capacity

for up to 800 people which has the lexibility to be divided into three rooms to accommodate the needs

of all types of events.

Advertisement

21st Century Workforce and Societal Shifts By Lindsey L. Larsen, Diplomatic Courier Correspondent

Life is a process. A series of milestones set up in a sequential kind of order, ensuring that from start to

inish, every person completes the ‘process’ that is life. For example, going to college and getting degree has

become a more consistent milestone across both the

nation and the globe. Higher education, formerly viewed as a luxury, is now viewed as a necessity. We seek the degree because without it, we are not afforded the

same job opportunities. Finding a job and beginning a career in order to earn a living is also one of those major

milestones. It symbolizes independence and self-sufi-

ciency, traits that also signify success. The problem is that there are not enough jobs to go around.

It poses the global question, what is causing the job

shortage? In theory, the professional working world is like an escalator. Every worker starts at the bottom step; they slowly but surely work their way up, and exit once

they arrive at the top. Workers today are reaching the top of the escalator and stopping, they are choosing

not to retire because of the nation’s current economic

state. That leaves the younger generation with fewer job options and more qualiications, increasing the competition in the working world today.

About 50 percent of the global population falls into the age bracket of being 27 years old or younger, and every year thousands of college graduates enter the

workforce. Each of them is facing the reality of how simply having a degree does not guarantee anyone a job, only

more competition. However, young people are ighting back. While they may not have the work experience in comparison to their older-generation counterparts, they

have developed a brand-new set of skills surrounding

technology.

Dubbed the “Technology Generation,” young people are claiming their authority on something that matters

to the world’s economy: the social media. Through the use of the Internet, this generation dominates their

technological skills by using the social media resources

to change not only the way people live and work, but

also the way in which the world communicates with one

another. This generation has empowered themselves with a new way to make an impact, by using the techno-

logical tools they are equipped with to maximizing their impact. Their technological tools will also enable them to solve the global problems they are inheriting, and they

currently face more problems than any other generation

before them.

The two most effective technological problem-solv-

ing tools are Twitter and Facebook. Twitter has rapidly achieved worldwide popularity, and as of 2011 has over

200 million users, generating over 200 million tweets per

day, and is sometimes referred to as the ‘SMS of the Internet.’ It is only one of the ways to network online, but it has demonstrated strong inluence among the younger generation and has a signiicant impact on how things get done. While Facebook currently has over 750 million active members, it is proving to be one of the pillars of

change behind the Digital Enlightenment. Online com-

munication is evolving into one of the most effective

ways to send out information because of Twitter and

Facebook. Leadership relies on effective communica-

tion, and that is what social networking is all about.

The tools that the Technology Generation needs

in order to combat the abundance of global problems

they will inherit extend beyond just the social media. Leadership style and frugal innovations combined

with the social media will be necessary for all young

global leaders. China believes a way to innovate future global leaders is to reward scientiic advancements at a young age; they predict that by using this method, it

will leverage global brainpower and can be localized to stimulate local growth across the globe.

The societal changes in the workforce surround the

number of jobs and the necessary skills to perform said

jobs. Young people are combating the lack of jobs in the economy by using technology to create their own jobs. In turn, they are creating their own workforce, one that

rivals the older generation of workers who are choosing

not to retire. They are creating solutions to the problems. New skills are required for these new types of jobs, and

young people have the advantage.

The hallmark of any good entrepreneurship is the

ability to innovate and keep coming up with solutions. The Technology Generation is highly capable of

overcoming what is lacking, which is suitable platform

that can act as a launching pad for our ideas. The young people of today use the social networking mediums to

express their creativity in ways that were not possible for

the generations before. Assuming each new generation in the workforce brings new skills and change to the

table the younger generation is bringing technological

innovation, creativity, online networking skills, and the

way to use their skills effectively. Technology has become an integral part of the workforce, and the Technology

Generation are the workers who are setting the bar.


96

OP-Ed: You Cannot Cut the Seamless Web of History

By Robert F. Bennett, Former U.S. Senator and Resident Scholar at the University of Utah’s Hinckley Institute of Politics

I don’t know who said that irst, but I heard it from my high school history teacher, and it has stuck with

me over the years. Through a career that has taken me throughout the world on business and then into the U.S. Senate, I have learned that the concept of a “seamless

web” is correct.

You cannot make an accurate analysis of Amer-ican-Japanese relations if you start in 1945, with the dropping of the atomic bomb on Hiroshima. To understand why that was done, you must know

about the fanatic fight-to-the-last-man dedication of

Japanese troops during the island hopping campaign in the Pacific in 1943 and ’44, which convinced American planners that an invasion of the Home

Islands would cost up to a million American lives and

probably more Japanese. You cannot understand the island campaign unless you study the Japanese attack on Pearl Harbor, in 1941, and the Japanese defeat at the Battle of Midway in 1942.

You cannot understand the Pearl Harbor attack unless you understand Japanese fears for their economic survival that arose in 1940 from the embargo placed on shipments to Japan by the United States. You cannot understand the reasons for the embargo unless you go

back to Japanese actions in China in the 1930s. And so on.

History matters because it shapes our perception

of what we need to do now. It is important not only to get the facts right but also to place them correctly

in the seamless web. The most dangerous thing a nation’s leaders can do is to pick and choose only those

historical tidbits that conirm their bias, and then, if that does not work, make something up. The President of Iran embraces the iction that the Holocaust never happened because he wants a “historical basis” from which to demonize the State of Israel and weave conspiracy theories for his followers around the foreign

policy decisions of the British and the Americans with respect to it.

Far too much foreign policy is built on this cultural

practice of using history to exploit ancient grievances,

embroidering them with lists of fresh insults and slights. Racial hatred tied to ancient tribal feuds causes wars.

But it need not be so. There is no “hatred gene” in anyone. It is something that must be taught to us rather than something that is born in us. The Germans and the

French hated and killed each other, just for being French

of German, for centuries, until a new generation in both

countries, after the Second World War, realized just how stupid that was. They still have their differences, to be sure—all countries do, to one degree or another—but their cooperation in creating the European Union and

working together on many issues relating to it has made

war between them a distant memory.

All national leaders should have a deep and accurate

sense of the history of their adversaries. Gandhi’s campaign of non-violence could not have won India’s

independence if had not been built on his understand-

ing of how well it appealed to British values. If he had tried it in the Soviet Union during Stalin’s reign, he would

have been shot on the spot. America’s misadventures in Vietnam were rooted in Robert McNamara’s (and the Kennedy brothers’) lack of knowledge of the history of Ho Chi Min, particularly of the role he played as an

American ally in World War II.

After 9/11, I did my best to gain such an under-standing of the history of the attackers. I began to study the history of Islam and the Arab world for the

irst time—such history receives little or no attention in American schools—and learned a lot about a major civi-lization which has made many contributions to modern society. I do not condone the acts of the terrorists in any way, but I have begun to understand them better

now that I know more about them and their background. I wish they would make a similar effort to understand

Americans and our background.

On the 60th anniversary of D-Day, a young woman

who was born years after the event, who worked as

a tourist guide on the beaches and in the cemeteries,

pledged to the assembled dignitaries, “We shall never

let anyone forget what they did on that day.” The German Chancellor was there, next to the President

of France, an honored guest. That was appropriate, because those who prevailed at Normandy eventually

liberated the Germans as well as other Europeans from

the clutches of Nazism.

This was history at its best—a past accurately remembered and heroic deeds properly honored by

those who had made history of their own by forging a

new bond of peace out of the ashes of war.

Former Senator Robert F. Bennett (UT) is the

Hinckley Institute of Politics’ Resident Scholar.


98

DHL – The Future of Logistics

Advertisement

by Roger Crook, CEO DHL Global Forwarding, Freight

The Future Happens Now

Spanning the globe, the

logistics industry inluences and affects the world in which we

operate. But logistics companies are equally affected and inluenced by trends and developments

around the world, such as global-

ization or scarcity of resources, as well as the changing expectations

of customers and employees.Global trends and develop-

ments in the political, economic

or social area directly affect the

conditions DHL works under

and signiicantly shape the daily business we pursue. The logistics industry in general and

DHL in particular thus not only

drive economic growth but are a

business barometer at the same

time. DHL therefore attaches highest importance to all factors

that shape our future. By investigat-

ing them, we learn about the future

of logistics as well, which is the

future of our company.

Go Sustainable – GoGreenAccording to a recently-

released study, the pursuit of

sustainability will transform the

logistics industry, both in terms

of its business model as well as

the range of advanced solutions

and technologies that will be used

by logistics service providers. Similarly, many people from all over

the world are concerned about the

threatening consequences caused

by the climate change and refer

to these when being asked for the

number one challenge of our times. Sustainability and, irst and

foremost, environmental protection

are an integral part of our corporate

strategy. In this area, we have been pioneers in two respects: as the irst

logistics company that has set and

pursues a concrete CO2 eficiency goal – 30 per cent improvement by the year 2020 compared with

2007 – and as the irst supplier of CO2-neutral mailings, using the

mark “GOGREEN”. Imagine: the Deutsche Post DHL group delivered

around a billion CO2-neutral

GOGREEN shipments in 2010 – a

third more than in the previous year.

Change of Perception

According to the study, our

industry will be key to compre-

hensive carbon reduction efforts

in most sectors due to its unique

expertise and positioning along

the supply chain. We have an enormous potential of helping

other industries on their way to

becoming low-carbon economies. Some 63% of business customers believe that logistics will become a

strategic lever for CO2 abatement. Therefore, in addition to its strategic

economic importance, logistics will

increasingly be seen as essential to

achieving lower carbon emissions

across the economy.As customers, policy-makers

and companies begin to realize that logistics services and expertise

are key to providing sustainable

solutions, logistics will no longer

be viewed as a commodity, where

offering the cheapest solution rules. The leading logistics companies will

be those that possess the unique

value proposition of providing

sustainable services.

DHL – A Good Corporate CitizenWe recognize that we have

a special responsibility to use

our global presence, as well as

the knowledge, experience and

commitment of our employees in

local markets around the world, to

beneit society. As anchored in our corporate strategy, we aim to make

a positive contribution to society,

and support the long-term success

of our company through sustainable

and credible social engagement.

GoHelp: Disaster Management

When a natural disaster strikes,

communities and organizations around the world mobilize to send relief goods to the affected area. We provide the ideal global network

for helping people impacted by

major natural disasters. Our support focuses on global programs in two

core areas: Immediate disaster

response after natural disasters and

disaster preparedness. In addition, our company and

our employees are contributing

time and donations to deliver help

to affected communities around

the world.

GoTeach: Education

We support education and

equality of access to education

worldwide. As a large organi-zation with a high demand for qualiied employees, we cannot afford to ignore the dificulties in education today and leave the

responsibility to others. We are aware that our continued success

as an organization is reliant upon well-educated employees across

the whole range of educational

qualiication levels. This is why we promote and support initiatives that

improve equality of access to good

education and empower children to

ind their place in society.In addition, GoTeach gives

our employees the opportunity

to get involved by volunteer-

ing in educational projects and

thus expand their own horizons and contribute to the objective of

minimizing educational inequality.Apec CEO Summit 2011

104

Technology – Challenges and Opportunities for the Logistics

Industry

Sustainable future logistics

depend on innovative technolo-

gies. Forward-looking solutions signiicantly help the logistics sector reduce its carbon emissions, as

shown in the example of RFID,

Radio Frequency Identiication. RFID organizes supply chains in the most eficient way without detours and with a minimum use of

fuel and energy only, which saves

valuable resources and protects

our environment. Importantly, RFID is not a stand-alone solution. The more stakeholders in the supply

chain make use of it, the greater is

the beneit it brings along.Another future-oriented

example is multi-modal transport,

which combines different modes

of transport for a more eficient shipment and supports the greening

of supply chains. Our respective

services move goods by ocean

from Asia to a connecting transit

hub in Dubai, Vancouver, or Los Angeles, then transferring to lights into Europe, Middle East, Africa and

Latin America. By switching modes, customers can often cut their

CO2 emissions in half. Moreover, multi-modal services make use of

state-of-the art technology, such

as GPS track and trace, and the

“e-Lock” device, as well as a sur-veillance camera system to capture

data while loading and unloading.

Manage CO2 emissions more

easily

The Carbon Dashboard, a

new service developed by DHL

Global Forwarding, Freight helps

customers better understand the

main drivers of carbon emissions

from the various transport modes

involved including pickup and

delivery emissions in their supply

chain. It helps account for and manage carbon emissions,

including third party emissions,

with detailed and reliable CO2

mapping available instantly from a

web-based hub.The Carbon Dashboard ensures

a standard calculation approach

and treats CO2 as an integrated

business parameter, putting it into

relation with other supply chain

parameters such as volumes

shipped, product density and trade

lane eficiency. It also enables them to dry run various carbon reduction

scenarios using real data and

explore the effectiveness of different

optimization levers.

Still, there are further challenges

the future of logistics will have

to overcome. Just think of the increasingly complex structures

and demands of growing cities,

for example. By 2050, 70% of the world population will live in cities,

and in many areas, the modes of

street transport common today will

only be possible to a limited extent.With City Logistics, we

develop integrated, one-stop

solutions that are it for the future. By combining similar shipments, e.g. for gastronomy, hospitals or

hotels, trafic is regulated more eficiently in order to promote the economic growth of a city as well

as to improve the quality of life. The cooperation with and support

from municipal and state authorities

enables the creation of innovative

system solutions. An initial pilot project has already been started in

Dubai.

Green Growth

While many still see a contra-

diction between economic growth

and environmental protection,

sustainable business strategies

can actually enhance proitability, and will even be a prerequisite

to long-term success for most

companies in the future. Carbon pricing mechanisms will accelerate

a market based dynamic towards

more sustainable solutions. Once there is a real price tag attributed to

carbon emissions, the environment

will be an integral part of investment

decisions.Moreover, sustainability has

become a major reputation factor

for every company, whatever

industry it might come from. As a result, shares of companies who are

known as “good corporate citizens” perform better than the shares of

those who pursue no sustainability

strategy, which has become even

clearer ever since the latest inancial crisis.

According to the vision

statement of the APEC CEO

Summit 2011 – “The future. Redeined” – we irmly belief that the future does not simply happen

but that we can shape the world

of tomorrow collectively in the

present. There is no reason to wait any longer. Let’s contribute to jointly shaping a sustainable future.

DHL in Asia Paciic• Network: 120,000 destina-

tions served in more than 220

countries and territories

• Over 586,000 customers• Approx 60,000 employees• 10,300 vehicles • Over 1,500 locations• Approx 350 daily commercial

lights

Rethinking Healthcare: China’s Aging PopulationBy Jordan Fischer, Hinckley Institute of Politics

China’s Family Planning Policy, commonly known in

the West as the “One-Child Policy” is wrapped up tightly in China’s desire to modernize. When the Chinese government installed the One-Child Policy, it instigated

unusually rapid fertility and demographic transitions,

causing exaggerated social changes in many sectors. One of the most pressing problems stemming from this

world without siblings is known as the “4-2-1 problem.” Chinese culture places great importance on ilial piety, meaning that parents traditionally had no reason to

worry for their retirement or health care costs, because

their children would indubitably provide for them. In the new singleton generation, however, one child is now

responsible for the care of both parents, a responsibility

that is often too great to bear alone.

Thanks to China’s lightning transition from a

traditional society to a relatively modern one, the

population is rapidly aging, but there is currently no

established governmental or even widespread private

retirement security in place, anywhere in the country. This means that many working citizens might soon be unable to support their elderly family members, and with

no governmental safety net, the fate of China’s seniors—and those who must support them—is insecure.

“When Mao’s enormous baby boom generation

reaches retirement age in a few years, Chinese oficials fear that their families will be unable to provide inancial and social support,” explained Jane Macartney in 2008. China’s massive population is aging faster than nearly any

other on the planet. A government report estimated that in 2009, there were approximately 167 million Chinese citizens over the age of 60, making up 12.5 percent of the total population, and growing by approximately 3 million a year, relays Jaime FlorCruz in a 2011 report. At the same time, the population of working adults is

shrinking, as a rapidly declining birth-rate over the last

two generations is compounded by the fact that young

workers are putting off entering the workforce in favor of

continuing education. As a result, more elderly must be supported by fewer working young people. Population Reference Bureau’s analyst Toshiko Kaneda explains, “While the number of elderly in the population who

require care is growing, the size of the work ing-age population (who pay much of the healthcare costs) is shrinking. The elderly support ratio—the working-age adult (ages 15 to 64) per number of elderly (age 65 and above)—is projected to decline drastically, from 9 persons to 2.5 persons by 2050.”

In fact, actual ratios are probably even slimmer,

because as Vanessa Fong writes in her book, “Only Hope: Coming of Age under China’s One-Child Policy,” mandatory retirement ages are often under age 65, and many factory shut-downs have forced early retirement

on people as young as their forties, reports Don Lee. As China modernizes and becomes increasingly involved in the global market, the older generations’ skills are

becoming inapplicable. According to UNICEF and the World Bank, however, life expectancy in China was 73 years in 2009, meaning that the average retiree must live off of savings or his/her family’s charity for at least 13 years, usually more. Whether laid off or simply forced to retire at 50 years of age, older people in China are losing their income and becoming dependent on their

families early on, constituting a signiicant burden for an extended period of time.


106

While other countries (such as Japan, the U.S., and many in Europe) are facing similar problems resulting from a rapidly aging population, these countries, having

passed through the fertility transition much more

slowly, have more developed infrastructures, including

established social security systems that are designed to

take care of the elderly. Unlike these countries, China’s only retirement security system currently in place is the

traditional model of ilial duty. This system is based on individuals and is often dysfunctional; at best, it is

unregulated and insecure.

In January 2011, however, a proposal was submitted to amend a Chinese law, requiring citizens to visit their elderly parents, reports FlorCruz. Such a law is already in place in Singapore, where under the

“Maintenance of Parents Act” the elderly have been able to sue their adult children for money and/or

care-taking since 1995. Unfortunately, whether or not this proposal becomes law in China does little to solve

the real problem: many families, no matter how hard

they try, will be unable to support their elderly parents

by themselves. Kaneda explains that in spite of national chronic disease prevention programs, set up by health

oficials to address the growing population of seniors, the health care system has become increasingly inac-

cessible for the common Chinese people in the past

two decades, as it becomes more market-oriented and

prices soar. Retirees are hit especially hard by the rising healthcare prices against their non-existent income.

While some efforts are being made to establish

care centers, professional elderly care is a relatively

new concept in Chinese society, and as such the ield lacks trained and experienced workers. Some local governments are hastily training laid-off factory workers

to ill this need, but many—including Kaneda—wonder if it will be enough to properly care for the many elderly

whose families are unable to do so. While many hope that this sort of program will develop in the coming years

to help alleviate some of the child’s heavy ilial respon-

sibility, others argue that this effort is far too small, and

because it is not inancially supported by the central government, the care these programs provide comes

at too high a personal cost for most families to afford,

preventing it from reaching the necessary levels of effec-

tiveness to solve China’s “4-2-1 problem.” Peng Xizhe, a professor of Population and Development at China’s

FuDan University, explains, “The [family planning] programme requires couples to reduce the number of

children they produce, but is unable by itself to provide

adequate social support for people to adjust their family

planning strategy.” Many critics argue that to fully support its mandated policy, the Chinese government

must ind and actively maintain a way to support its mushrooming population of aged citizens.

With China’s elderly now making up a solid

eighth of its population and no social security system

in place, the country faces an increasingly urgent

situation as the population ages at an unprecedented

rate. Although the central government has yet to enact or support any kind of social security program, some

local governments have supported grassroots efforts

to provide elderly care, which have been established in

recent years.

Private nursing homes have begun to provide

for those whose families are unable to do so, but they

are still too few in number to be widely effective, and

too expensive for most families to afford. Community-based care services are also available in some areas,

some supported by the local government and others by

private enterprise, providing the elderly with daily care

and their families with information on other services and

how to care for their elderly relatives.

As the problem grows more urgent and these

local care facilities become more established, it is

possible that the government, having already publicly

recognized the issue, will contribute funding and/or oficial status to these care-giving establishments, helping them to develop and increasing the availability

of elderly care in China. A social security system may soon be on its way.

Jordan Fischer is a senior at the University of

Utah studying International Economics, Mandarin and

Spanish Languages. After studying abroad in Tianjin

in 2009, she returned to China in 2011 to work in an

internship position with the Hinckley Institute of Politics.

POPULATION


108

Global Financial Regulation in a Coordinated FashionBy Mark Pittman, Hinckley Institute of Politics

The recent 2007 recession, as described by the U.S. National Bureau for Economic Research, has brought about global calls for strengthening the inancial regulatory structure around the world. These calls have come from the developing BRICS nations of Brazil, Russia, India, China and South Africa, as well as from

developed nations such as the United States and the

countries of Europe. With resonating support emanating from the populace of the world’s nations, as reported

by groups as diverse as the ParisTech Review, following

the recession the question now becomes how inancial regulations can be strengthened at a global level without

hampering economic growth.

Growth is the single largest determining factor in

politics today; the growth of the economy correlates

positively, and directly, with the growth of political parties

and the success of individual politicians. One thing is clear: economies have to grow and people must be

able to work in the 21st century. Warding off the next inancial or economic apocalypse is essential for growth but ensuring that those regulations are not detrimental

to growth is another thing entirely.

In October 2007, Frederic S. Mishkin wrote: “Among the institutions that are most crucial to economic growth

are those that enable a country to allocate capital to its

most productive uses. Such institutions establish and maintain strong property rights, an effective legal system,

and a sound and eficient inancial system.” These principles not only still hold true despite the recession

and inancial crisis experienced in late 2007, but are the cornerstone of a vibrant and growing economy.

The Associated Press announced China’s accession

into the World Trade Organization in 2000 and its subsequent rise to become the world’s second largest

economy in 2010, thereby changing the status quo for

the developed nations of the world. The need for com-

prehensive and global inancial regulatory structures and cohesive agreement among nations has arrived. In the era of globalization and wide-spread web connectivity, the terms of engagement have changed to include more


112

people in more places at more times than ever before,

as reported by TIME magazine. Connectivity through the Internet has spread from the personal computer

to mobile data phones, tablet computers and beyond. The most important implication that this brings to the

table is that governments can no longer control the low of money, information and ideas that way they used to

within their own borders. The new digital world is always evolving and continuously growing which means the

regulatory scheme must follow.

It has already become clear that the only way to

ensure greater stability for the entire system is for

inancial reform and strengthened legislation to occur globally. This presents not only a challenge but also an opportunity. Members of the G20 have assigned a Financial Stability Board; the European Union announced the coordination and creation of the Basel III banking regulations; and the United States’ government, through

conirmation by the White House, signed the Dodd-Frank Act into law. All three are valiant attempts to strengthen inancial oversight and remove volatility from a fragile and recovering economy, but these measures still fall

short of what is necessary.

A single set of ideas and principles must be drafted

into a treaty upon which all members of APEC and

perhaps even the G20 can agree. What globalization has shown us is that there is no place in the world untouched. If the United States enacts legislation that protects its

markets and economy from the effects of a crisis, and

another nation, such as Japan, does not follow with very similar measures, then the United States will sit at

a competitive disadvantage which will only cause more

individuals around the world to take advantage of the

loopholes in Japan and exploit the system to the brink of collapse. The coordination of inancial regulation does one thing better than a fractured system: it provides

businesses and individuals across the world with a set

of universal standards that make commerce and trade

cheaper, more eficient and more effective and bring stability to the global inancial markets and economy. This produces results for politicians who want and

need less volatility in their economy to stay in ofice—it beneits businesses and individuals who have common and coordinated standards to work with, and, most

importantly, it brings together the leaders of the world to

discuss policy in a comprehensive manner rather than in

a fractured and divergent way.

Starting on the path to a more stable global economy

can be as simple as arranging a group conference to

discuss these pressing issues. During the Asia-Paciic Economic Cooperation Summit, the world’s strongest

leaders can make both progress and headlines

while ensuring the vitality and success of the global

economies. Growth is necessary to ensure the success of businesses, individuals and governments around the

world, and making this growth easier, stronger and more

eficient should be APEC’s goal, while staying true to its mission of uniting to build a dynamic and harmonious

community supporting sustainable economic growth

and prosperity.

Mark Pittman is a student at the University of Utah

completing a Masters’ in International Affairs and Global

Enterprise. His educational background includes three

undergraduate degrees in Political Science, Economics

and International Studies at the University of Utah. Mark

has spent a great deal of his life all across the world,

having lived in Germany for 11 years, the United States

for nine and having traveled extensively to Australia,

China and various other parts of the world.

GLOBAL FINANCE


114

Pressured to Study, Unable to Perform

By Shawn Quigley, Hinckley Institute of Politics

China pressures students to learn, but cannot

produce jobs equal to their skill level. From primary school to the university level, students in China are

pushed to study hard and receive good marks on

their exams, all in preparation for the exam that is said

can change one’s life. The marks that these students receive will determine the path of education they take,

inevitably determining their future. Testing decides what middle school, high school and university the students

will attend, and these high-stake exams even inluence what line of study the students go into. Driven to get good marks on their exams, students are often sent to

cram schools by their parents in order to receive extra

instruction. Studying is very important to the Chinese people—all those exams and extra hours at school prepare students for the exam of a lifetime, The Higher

Education Entrance Examination or the Gao Kao.

This emphasis on education performance came from

the Chinese government, which saw a need for more

educated citizens. Higher education was seen to be the key to solving many of China’s economic problems. Giving more people opportunity for higher education

would then satisfy the demand for more professionals

that could allow China to compete in the global market. The world is growing fast and to meet the demands of

globalization, more skilled workers are needed. This government priority makes it much easier for all to attend

college and graduate, but now China has the problem of

actually placing all those new graduates with jobs. This process has been more dificult than anticipated, leaving the whole country with a high volume of unemployed but

highly educated citizens.

Unemployment among the graduates is at a high

11.9%. The high unemployment could be blamed on China’s vast population and the subsequent large low of students graduating. Most of the issues are found within China’s enormous cities where students go to

study; the cities are too crowded and there is no room for

the graduates. China’s younger generation is called the generation of the “Ant Tribe,” getting this title because of the high volume of students who do travel to the big city

for higher education, then stay there after graduating in

anticipation of inding a job to it their new-found degree. This plan not working out as smoothly as one would

hope. Instead of inding a job that would it the degree, many are asked to return home to a factory job, forced

to accept a job that has little to do with the degree

earned, or can’t ind a job at all. The supply does not it the high demand for jobs.

It would be easy to rationalize that too much demand and with too little supply would be the simplest

way to understand the gaping unemployment rate

among Chinas college graduates, but this doesn’t quite


116

compute. The problem isn’t lack a lack of jobs for graduates; it’s a lack of ‘qualiied graduates’ to it the jobs.

China sends more students abroad in the world than

any other country. From 1972 to 2009, China had 1.39 million people go over seas to study. More than 400,000 of these students sent abroad have returned home. These students are known as sea turtles, traveling

abroad to study and returning home, often inding work very quickly. Their newly obtained education and skills found outside of their native land allow for these students

to be very competitive, more so than any who graduate

from even the top universities in China.

Domestic colleges are being placed lower and

lower on the college totem poll. The return of an oversea graduate is seen as a valuable asset. The skills obtained from an education while abroad, as well as

their experiences and talents that either earned them

their opportunity to study abroad or that they gained

while studying in another country are just too appealing

to leave alone. These graduates are returning and taking all the jobs that otherwise would be awarded to

domestic graduates simply because these students are

seen to be more qualiied for the positions offered.

YaSheng Huang, Professor of political economy and international management at the Massachusetts

Institute of Technology says speciically that “there is a skills mismatch.” Referring to conversations with managers and entrepreneurs who always complain

about; “a shortage of people with the right set of skills,

capabilities and inclinations,” he argues that “China is so short of the right human capital.” There is not a shortage of jobs; there is a shortage of students with

the right skill sets. Beijing Bureau Chief Jaime FlorCruz said, “If China is to evolve from a mere manufacturing

capital of the world into a global hub of innovation, it will

have to realize that developing human capital is more important in the long run than technology and money. Talented people will bring both.”

China is working hard to solve this issue: packages

are being offered to help small business owners,

incentives are being given for students to return to rural

areas and work and students are being given opportuni-

ties for even more schooling after graduation. However, an overall solution to the high unemployment among

graduates would be to reform China’s education system

as a whole. While test scores are valuable and studying is very important, more emphasis needs to be put actual

working experience and fostering a form of learning

that sparks creativity and would give domestic students

the edge needed to compete with students who study

abroad. This type of education needs to begin at grade one. While reforming the education system is a more long-term solution for the high unemployment,

offering more educational opportunities through trade

or vocational schools could be a short-term solution,

providing people an opportunity to gain a skill and ind a vocation to match that skill more easily.

In reforming the education system, China would

reach its goal of producing more educated citizens who would be more qualiied and able to help compete in the global market; it would be a long-term investment

on human capital. Adding more trade and vocational education systems would also decrease the overall un-

employment rate by giving those who cannot attend

a four-year university an opportunity to obtain a

valuable skill set for themselves and China while giving

graduates who now are jobless a second chance to

gain a useful skill set that would provide an opportunity

for work. China needs to invest more time and money on human capital.

Shawn Louis Quigley

is a senior at the University

of Utah. In 2009 he had

the unique privilege to be

an intern for the Hinckley

Institute of Politics in Tianjin,

China, where he worked for

Wizard English. Shawn will

graduate in May 2012 and

plans to pursue an MBA or

receiving a degree in law.

EDUCATION


117

Making Sense of FukushimaBy Henry Sokolski, Nonproliferation Education Center and Hinckley Institute of Politics

Ask a nuclear expert about the reactor accident at Fukushima and you are likely to get overwhelmed with a tidal wave of technical points—everything from how poorly the reactors’ hydrogen vents and emergency generator systems worked to what permissible exposures to radiation should be. It can be mind numbing.

None of these explanations, though, hit what matters most: how Fukushima has dramatically increased nuclear power’s relative costs and risks. Here the story is relatively simple. Many of the world’s richer economies—including Germany, Switzerland, Italy, Austria, Sweden, Spain, Norway, Denmark, Belgium, Taiwan, Japan, Kuwait and the U.S.—have slowed or shuttered planned reactor construction and are focusing instead on alternative ways to generate, distribute and store electricity.

The last time anything like this happened was nearly a quarter century ago in reaction to the nuclear accident at Chernobyl. Then, the U.S. and much of Europe put their nuclear power plans on hold. Since 2000, though, growing concerns about carbon emissions and global warming garnered more support for new nuclear power construction, that is, until Fukushima. Earlier this year the International Energy Agency (IEA) optimistically forecast a near doubling of reactors on line by 2035. After the Japanese meltdown, IEA slashed its forecast dramatically.

Industry insists that all of this is just a temporary setback. This, though, is mostly bravado. Existing nuclear power plants will continue to operate and several more will be built in Eastern Europe, China and Korea, but any massive nuclear revival similar to that presumed before Fukushima is unlikely on several counts.

First, even before Fukushima, construction costs were making new nuclear power plants uncompetitive against modern natural gas systems. A large power reactor was projected to cost anywhere from $6 billion to $10 billion and take ive to 10 years to bring on line. Now, with the nuclear safety reviews Fukushima has prompted, these costs and build times will only increase. Meanwhile, large, advanced gas-ired generators, which emit roughly one-half the carbon of an equivalent sized coal-ired generator, cost as little as $700 million to build and take as little as 18 to 36 months to complete. As a result, almost all U.S. electrical utilities are substitut-ing their old coal-ired plants not with nuclear, but with natural gas-ired generators.

Natural gas also is becoming more affordable and plentiful, not just in the U.S., but in the Middle East, Med-iterranean, China, Australia, Latin America and Europe. The reason why is the development of unconventional techniques for extracting gas. These new methods, including deep fracturing and tight gas extraction, have turned the U.S. from a natural gas importer to a natural Apec CEO

Summit 2011

120

gas exporter. They also have ignited hopes of reversing Polish dependence on gas imports, and turned Israel and Lebanon into future natural gas gold mines. Meanwhile, advances in pipe and liquefaction transport technologies are moving the world away from local to larger, regional natural gas markets.

All of this will buy time as the costs of more sustainable forms of clean electrical generation—e.g., wind, solar, small hydro, biomass—continue to decline. Integrated, smarter electrical grids will also help deal with these intermittent energy sources, as will cheaper electrical storage systems. Germany and others are banking heavily on these developments as they wind down nuclear power plant operations over the next two decades. For them, the risks of increasing their reliance on nuclear power seem higher than the economic un-certainties of weaning themselves off it.

This, then, brings us to the second nuclear problem Fukushima dramatically compounded—how liability for nuclear accidents is now viewed. Fukushima, which involved an advanced safety conscious country and U.S.-designed light water reactors, was not supposed to happen. That it did happen dramatically increased all nuclear liability calculations.

In the case of the l979 nuclear accident at Three Mile Island, the clean up cost less than $1 billion over 12 years. Indirect damages caused by the 1986 Chernobyl accident have been estimated at several hundred billion dollars but the actual amount paid out by governments over the last two decades was no more than $10 to 15 billion.

In contrast, the Japanese government already has pegged direct Fukushima damages at more than $50 billion and Merrill Lynch reported they could conceivably run as high as $130 billion. These numbers are ive to 10 times greater than the maximum amount of insurance coverage the U.S. government currently requires the U.S. nuclear industry to provide. Under current law, U.S. nuclear operators have put roughly $300 million aside to cover off-site damages. Industry can be required to pay out roughly another $12 billion over seven years for any speciic accident. But that is all. Anything more must be covered by the U.S. government. Before Fukushima, $12 billion seemed suficient, but not any more.

Now, the worry is that U.S. nuclear safety regulations are too relaxed. Industry knows that tighter safety rules will drive construction costs to record highs; it is already resisting such rule making. This may cheapen operation of existing plants but it is sure to delay agreement to new safety regulations, which will only put off new reactor

construction further.

Meanwhile, potential nuclear customers in developing states are becoming far more wary of American nuclear vendors who continue to insist, as they did with Japan, that U.S. irms be absolved of any liability in the case of a nuclear accident. In India, America’s insistence on this point has become a major political issue.

This, then, brings us to the inal reason Fukushima has dimmed nuclear power’s prospects. Having spooked the world’s established economies from pursuing major nuclear expansion, Fukushima’s negative nuclear market fallout is goading the world’s nuclear vendors to shore up sales by pitching their wares to potentially dangerous customers in the Middle and Far East and in Africa.

Saudi Arabia, whose leadership has announced that it must get nuclear weapons if Iran does and that it is willing to pay up to $300 billion to build 16 large nuclear power plants by 2030, is one such market. Turkey, which once toyed with using civilian power plants as building blocks for a possible bomb program and now faces a nuclear weapons-ready Iran, is another; it has plans to build 20 nuclear power plants. Syria, which was caught building a covert nuclear plant in 2007, still wants to build power plants, as do Egypt, Algeria, Iran, Nigeria, Vietnam, Bangladesh and Burma.

None of these states has anything approaching an independent nuclear regulatory authority. Many have harbored aspirations to acquire a nuclear weapons option and refused to forswear making nuclear fuel—a process that can bring them within weeks of acquiring a bomb.

Why does this matter? The answer is simple: one more Iraq, North Korea or Iran diverting a declared “peaceful” nuclear program to develop a bomb option, and nuclear power’s further expansion to developing states will be rightly viewed with the kind of suspicion that could jeopardize nuclear power’s development more generally. So far, the world’s nuclear vendors have effectively opposed proposals to tighten nuclear export rules signiicantly, but this is a short game. In the long run it is yet another key reason why banking on a massive expansion of nuclear power in the advanced world is now a bet against the house.

Henry Sokolski is executive director of The Nonpro-

liferation Policy Education Center in Arlington, Virginia,

and editor of “Nuclear Power’s Global Expansion:

Weighing Its Costs and Risks” (2010). He served on the

U.S. Commission on the Prevention of WMD Prolifera-

tion and Terrorism.

NUCLEAR SECURITY


121

A Participatory Approach to Democratic Reform in the PhilippinesJohn D. Sullivan, Ph.D, Executive Director, Center for International

Private Enterprise (CIPE)

Elections are not the sole ingredient for democracy. In a genuinely democratic state, the policymaking

process must relect the desires and priorities of the citizenry, and the mechanisms of the state must be capable of responding to citizens’ needs. Considered to be among the world’s worst performers in several

areas of public governance, the Philippines continues

to struggle in consolidating democracy. Recognizing the need to strengthen governance on the local level, the

Center for International Private Enterprise has worked

with the Institute for Solidarity in Asia (ISA) since 2004 to reform and build the capacities of local governments

across the Philippines. ISA is led by Dr. Jess Estanislao, former Secretary of Finance under the government of

President Corazon Aquino.

The principle mechanism used to achieve reform in

the Philippines is the performance governance system

(PGS); adapted from the Balanced Scorecard approach. The process translates organizational strategy into concrete and quantiiable outcomes by measuring whether the operational activities of an organization are aligned with its larger-scale and longer-term objectives

and strategies. Utilizing the PGS as a management tool, the Philippines has seen dramatic results in recent years.

To keep up the momentum for change, ISA gathered

citizen groups early on in the project to chart out a broad vision and direction for the Philippines. Collectively, the coalition created a National Governance Roadmap to

instill shared values, a sense of community, and the hope

for prosperity and progress. The roadmap was the irst step in the Philippines 2030 Project, which addresses public governance at the national level.

In the city of San Fernando, inancial management training enabled the city to dramatically increase local

tax collection rates and decrease the length of time

required to register a business from two weeks to two

days. Furthermore, the volume of resources mobilized through public-private partnerships has more than

quintupled. This growth in the city’s own-source revenue contributed to the doubling of city spending on

elementary education.

The city of Iloilo also increased locally-generated

revenue and reduced the time required to process

business licenses by 86 percent. This healthier economic environment contributed to a quadrupling of

the city’s manufacturing output by 2010. Additionally, the average score of Iloilo public schools on the National

Achievement Test increased by over 20 percent.

Improved bureaucratic performance in the City of

Marikina is permitting more aggressive environmental

stewardship policies, including a new policy to plant

1,000 new trees every year and the renovation and con-

struction of ive water treatment facilities. Such improve-

ments in public governance are, in large part, made

possible by the enhanced capacity of local institutions

brought about by ISA training.

ISA is also broadening its public governance

program to include more low income local governments

and national agencies with similar success. Largely a result of automation systems introduced in 2006,

Calbayog, a small rural city in one of the least developed

regions of the Philippines, has experienced an increase

in property tax collection rates from 10 percent to nearly

70 percent.

Strengthening public governance is crucial to

strengthening participatory democracy in the Philippines

and beyond. The PGS process requires citizens and the private sector to take part in forming public policy,

increasing transparency, and holding local leaders

accountable. Technical and professional education facilitates organizational and budgetary reforms that orient public institutions towards results, strategic

plans, and real impacts. Scorecards make clear where progress is being made and toward what purpose, and

where purpose is lacking.

The success of this initiative is evidenced by the ac-

complishments of participating cities and by the growing

interest among Philippines cities and national public and

private institutions. Tellingly, in the May 2010 national elections, 83 percent of the mayors that enrolled their cities in the ISA program were either re-elected or their

chosen candidates won in their place. This project’s success gives reason to hope that democracy can work

in the Philippines.

John D. Sullivan, Ph.D is executive director of the

Center for International Private Enterprise, (CIPE) one

of the four core institutes of the National Endowment

for Democracy and a non-proit afiliate of the U.S. Chamber of CommerceApec CEO

Summit 2011

122

This is year's Official APEC CEO summit publication

Documents

Transcript of This is year's Official APEC CEO summit publication