| Former Catalan President Calls for Stronger
Leadership in Europe
Jordi Pujol, former president of the government of Catalonia, believes that the European Union should be pleased yet cautious about the future. At a Continuous Education session on January 14, Pujol explained the success of two events that seemed unthinkable just a few years ago: the launch of the single currency, the euro, and enlargement, including the pending admission of 10 new members on May 1. Even though talks on the European constitution ran aground at the last EU summit in Rome, the fact that the constitution is under discussion is positive, he said. Yet the politician has grave misgivings about Europe’s future. He believes that the region is a political heavyweight whose role on the global stage is shrinking. In absolute terms, Europe is diminishing. Its aging population means that the number of inhabitants is set to fall from 80 to 70 million. Pujol stressed that Europe’s leaders should support immigration in order to maintain economic growth. They should not close off borders. EU Should Improve Output The political leader, who recently stepped down from the position which he held for 23 years, said that the EU has established "the best social model in the world." The EU is, by and large, a wealthy region, which effectively distributes wealth and enjoys a strong welfare system. But to sustain this system, productivity must not flag. He suggested that Europe could improve its output by working more hours and days, like the U.S. workforce. Pujol also said that Europe is a region full of fear. As an example, he cited the EU’s ban on genetically modified food, which he considered a baseless decision. "What Europe needs is stronger leadership," said the former president. Pujol urged regional leaders to look outward toward Europe and not always inward toward national politics. A more European outlook would enable political leaders to take the giant steps that Europe needs to grow. Finally, Pujol believes that the world needs Europe to reassert its position on the world stage. “Europe will never be the strongest region in the world again, but without Europe, the world economy will walk with a limp,” he said. Jesús-Mª Vila Barcelona, January 14. EU Firms Investing Tunisia is the most competitive country in Africa, according
to an independent study conducted by Harvard University in 2000. Moreover,
it is the fourth largest supplier of textiles to the European Union. Synchronizing Strategy and Information Systems In this session, Prof. Sandra Sieber explained the strategic value of IT and why “IT does matter.” Barcelona, February 26.
Of the countries counted as European by the United Nations, just one has a fertility rate (number of births per woman) above the replacement level of 2.1, which is the rate required to keep the population stable. The country is Albania and it is small and poor. The rest of the nations have fertility rates that vary from below replacement to fading away. Europe is becoming a vast geriatric home. Combined with rising life expectancy, a shrinking population spells distressing social and economic consequences. These demographic trends have a profound impact on employment rates, social safety nets, migration patterns, language and education policies. The impact will be especially acute in Europe’s state-administered pension systems, which are – for the most part – financed on a pay-as-you-go basis. That means that workers pay (via labor taxes) for the pensions of those who have retired. To decrease the fiscal distress that demography and the generous European pension systems impose, many European governments have attempted to cut pension benefits in recent years. The governments’ initiatives have provoked angry outbreaks from organized labor groups, which have blocked most of the required adjustments. Is Immigration the Solution? Immigration into the EU is at present both beneficial and decidedly modest. Would more be better? Shouldn’t Europe be more liberal about immigration, to redress its population imbalance? This is an appealing idea. But to neutralize the economic effects of an aging population, immigration would have to reach between five to 10 times its current levels. In fact, trying to preserve the ratio between the 15-64
age group and the over-65 age group (the so-called dependency ratio) through
massive migration alone is not politically feasible. The reason is simple:
Immigrants get old like everyone else and they tend to adopt the fertility
pattern of the local population. In short, Europe’s situation is not promising. Even a substantial increase in immigration will not make much difference for the European aging problem. Increasing the domestic supply of younger workers – which, in plain language, means having more babies – appears to be the most obvious remedy. Although the historical fertility trend is difficult to reverse, European governments should work hard to remove obstacles for women who want to have children and pursue a career. But this is not the only remedy. At the same time, Europe should remove current obstacles to productivity growth via more flexible labor markets, lower fiscal deficit, a better education system and a reformed public-pension system that allows private contributions to retirement savings. The task ahead is daunting but not impossible. An end to population growth is inevitable. But in all likelihood, European nations can adjust to this challenge. Amsterdam, February 19. EU Stock Perspectives IESE Finance Professor Javier Santomà presented keys to understanding the European Stock Exchanges in 2004. He discussed levels of volatility, the impact of interest rates and his reflections on the euro-dollar parity and the unification process of Europe’s financial markets. Warsaw, January 15. What’s the Future of Silicon Valley? Doug Henton, founder and president of the Silicon Valley-based company. Collaborative Economics analyzed the technology sector for a group of IESE alumni. San Francisco, February 12. Strategies for Creating Value Prof. José Manuel Campa met with Alumni in London and led a session titled “Teaming Up or Taking Over: Value Creation for European Mergers and Acquisitions Strategies.” London, December 3. 10 Commandments for Much of current strategy thinking involves projecting a desired or likely future state and then developing a change process to achieve that goal, asserted Prof. Jeff Sampler in this session. However, because of environmental turbulence and change, it is highly unlikely that many organizations can predict the future. Yet the entire strategic planning process assumes they can. Instead of gazing into a crystal ball for strategy development, an alternative view suggests to explore the most fundamental, flexible and necessary elements of a business model for in any business situation. These foundations will be the basis for developing more robust organizations.
The Key to Competitive Advantage Bruno Cassiman presented “Innovation: Key to Competitive Advantage” to IESE Alumni in Paris. The presentation covered three basic issues: the need for innovation by companies, linking innovation and strategy and, finally, how to organize for innovation. In the first part of the talk, Cassiman demonstrated the need for innovation. Innovation and firm performance are positively related as it allows firms to develop a more sustainable competitive advantage. However, compared to firms in the US, Europe is lagging in its investments in innovation. Nevertheless, there is substantial variation in investment across different EU countries. To improve the innovation performance of firms, it is important to incorporate thinking about innovation at the strategy-making level. Based on results from his own research, Cassiman shows how firms that combine different innovation activities such as in-house R&D, buying technology and cooperating with suppliers, customers and universities improve the performance of their innovation process substantially. He argues that these activities are complementary and leverage the investment in innovation by opening up the innovation process to external information sources. Paris, January 5. Choosing Your Future Prof. Mike Rosenberg provided tips for successful
professional careers: |