The inaugural Next STEP (Solutions to Economic Problems) Global Conference was held across two days on 1-2 November 2021 as a result of a collaboration between The Peterson Institute for International Economics (PIIE) and the Lee Kuan Yew School of Public Policy (LKYSPP). Its goal is to be a platform where leaders meet to address challenges to human well-being arising from economic instability, insecurity, and exclusion, made more apparent by the ongoing pandemic.
The November conference focused on three topics:
1. Supply chains in a world of conflict and COVID-19
Moderated by Professor Danny Quah, Dean and Li Ka Shing Professor in Economics, LKYSPP, the first session was attended by Mr Muhamad Chatib Basri, former Indonesian Finance Minister, Mr Chad P. Bown, Reginald Jones Senior Fellow, PIIE, Mr Michael Buchanan, Head of Portfolio Strategy & Risk Group, Temasek, Ms Jacqueline Poh, Managing Director, Singapore Economic Development Board, and Mr Tsai Ming-Kai, Chairman, MediaTek Inc.
There is no denying that one of the sectors significantly impacted by the pandemic is the supply chain industry due to lockdowns and travel restrictions. As noted by Mr Buchanan, there are still backlogs in seaports in China and the US. "These backlogs mean that suppliers can’t meet customers’ demands of goods, which will result in increased prices and inflation."
The scarcity of goods means that countries need to be self-reliant in providing for the needs of their citizens. But, as Mr Basri pointed out, this may lead to a sense of overt nationalism and isolation, putting one’s nation’s interest above others. "This can already be seen through the way vaccines are distributed; most prioritise themselves first on what's called "vaccine nationalism." Most are looking for ways to eliminate their dependence on other nations and ramp up domestic production.
According to Ms Poh, domestic production in all aspects may be impossible. "A semiconductor chip, for instance, is usually designed in the US based on IP in the UK, manufactured in Taiwan using chemicals from Japan, equipment from the Netherlands, and assembled in China." Doing this individually will cost about US$1 trillion in upfront investment and a price increase for the consumer. Ultimately, the panel agreed that globalisation and cooperation are inevitable for the greater good of all people.
The importance of partnerships in supply chains was also mentioned by US Commerce Secretary Ms Gina Raimondo, who highlighted President Biden's commitment to the Indo-Pacific region by developing an Indo-Pacific Economic Framework. "For Singapore, we've committed to a high-level dialogue on supply chains," remarked Ms Raimondo. However, the Senior Minister of Singapore, Mr Tharman Shanmugaratnam, said that it's essential not to have a bifurcation approach, meaning countries should choose either the US or China's supply chain. "It would be worse for the super economies and the developing countries," remarked Mr Shanmugaratnam.
He opined a better approach would be to have an open and connected world, where countries have a shared common goal, standards, and norms for the supply chain of public goods and services and data, a crucial part of today's digital cross-border economy.
2. Economic policymaking in Big Data, Big Tech global economy
One of the things that have been accelerated because of the pandemic is the need to embrace digital transformation. As stay-at-home orders are put in place to curb the spread of the virus, we become even more reliant on our smartphones and digital services, creating a digital ecosystem equipped with digital payment capabilities.
In the second session, panellists address the benefits, issues, and challenges facing the global digital economy landscape. "In China, 86% of the people use some form of digital payment. This allows the relevant parties to track consumers' spending and determine the proper credit amount for each applicant, a much-needed help during the pandemic. However, the same data collected can also be misused for negative purposes, such as misinformation," reminds Professor Chong-En Bai, Dean, School of Economics and Management, Tsinghua University.
A similar dual dichotomy of the digital economy was expressed by Professor Markus K. Brunnermeier, Sanford Professor, Princeton University, and Nonresident Senior Fellow, PIIE. "These digital platforms have enabled Small and Medium-sized Businesses (SMBs) to continue operations during a pandemic, so there will be continuous competition within the platforms (e-commerce sites) and between different platforms; regulating this is crucial, but don't be too rigid that it stifles innovation."
And Mr Karan Bhatia, Vice President of Government Affairs & Public Policy, Google, said that one-third of SMBs wouldn't survive the pandemic if they hadn't used any digital tools. One of which is Google's search ad and its algorithm. "Most SMBs won't even consider going beyond their local area, let alone international expansion."
Although digital technology has its pros and cons, the panellists agreed that privacy and security remain a top priority. The General Data Protection Regulation (GDPR) of Europe provides a good benchmark and framework, but it has limited authority and scope on a global scale. Unsurprisingly, the panellist mentioned a framework provided by the US, the largest global economy, could work, but it's still a long road ahead to accomplish.
3. Martin Wolf on cooperating in delivering global public goods: Next STEP Global Conference 2021
The COVID-19 pandemic has highlighted the importance of global cooperation to solve the problems that affect all humans globally. But, it is important to keep in mind that international cooperation is often initiated by the world's super economies, namely the US or China, to make a substantial impact. Other countries with lesser footing are then invited to join in exchange for favours and the non-threat of nuclear weapons.
However, as remarked by Mr Martin Wolf from the Financial Times, such an arrangement may no longer be applicable. "Due to Mr Trump's disregard of international cooperation, namely pulling out of the Paris Accord agreement and WHO, has put the US' standing into question, and increased China's dominance worldwide."
Mr Wolf suggested that we should abandon the notion of constant harmony and peace. After all, each country has its own interests. Instead, governments should list down the common goals they are willing to work towards together, such as climate change. "It's something that will impact all of us, and it's to our own best interest to work for the common good," says Mr Wolf. He adds that the same thing is also applicable to COVID-19 vaccines, as equal access will end this pandemic sooner rather than later.
Yes, COVID-19 has disrupted our way of life and has exposed flaws in the system. An undulating task ahead where governments and all relevant parties will need to come together and address the issues head-on with meaningful solutions, as suggested by our speakers. Doing so will leave the world as a whole better-equipped for the next pandemic or global crisis.
Photo Credit:: George Bakos
Watch The full Sessions here
Session 1: Welcome and Supply Chains in a World of Conflict and COVID
Session 2: Economic Policymaking in a Big Data, Big Tech Global Economy
Closing Dialogue: Is it possible for humanity to co-operate in delivering global public goods?