Economic Experts Blame “Absence of Leadership” for Stymied International Economy at Globalization TrendLab 2011

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Wharton’s Lauder Institute Hosts Conference Sponsored by Santander Universities to Explore Lessons Learned from Financial Crisis

PHILADELPHIA — Some of the world’s top global economists, social scientists and policymakers gathered at the Wharton School’s Lauder Institute at the University of Pennsylvania April 7-8, 2011 for the Globalization TrendLab 2011 conference entitled, “Global Risk: New Perspectives and Opportunities,” and sponsored by Santander Universities. Economists, sociologists, political scientists, scholars, and representatives from think tanks and foreign governments gathered to share lessons learned from the global financial crisis and to explore recovery solutions. Overarching sentiment focused on questions of market and government efficacy and the need for strong leadership.

Positive steps identified that could mitigate risk in our troubled global economy include:

  • Enhancing global governance, especially to accommodate the new importance of emerging economies.
  • Rethinking regulation so as to establish parameters for self-regulation and establish a set of cushions, bells and whistles to ameliorate the possibility of further systemic crises.
  • Encouraging policymakers and scholars to adopt a more humble attitude in terms of the extent to which they are able to understand and overcome the complexities posed by crises.
  • Staying on the alert for the weaknesses and faults in the global economic, political, and social architecture as people adopt shorter time horizons due to incentives, demographics, politics, and cognitive biases.

Best-selling author and keynote speaker, Nouriel Roubini, co-founder of Roubini Global Economics, explained that the crisis was a problem for both geopolitics and economics. “Due to globalization everything is interconnected,” explained Roubini. “There are loads of externalities, spillovers, and contagion. To resolve these problems we need global solutions and cooperation among countries. But not only is there no political leadership, there is disagreement — on monetary and fiscal policy, on exchange rates, on trade liberalization. We live in a world where the problems are global but the solutions are still national.”

Renowned globalization expert, Ian Bremmer, Founder and President of the Eurasia Group, also addressed the conference. “The economic paradigm of globalization over last few years has been multinationals from advanced industrial economies, mostly democracies, reaching out to the developing world and bringing their profits closer to us, under a set of rules created by and policed by those advanced industrial countries. That kind of globalization is over,” said Bremmer. “We would like to have global leadership reflecting the 20 largest economies in the world. We’d like to have a new Kyoto protocol, a new Doha round, a new Bretton Woods agreement. But we won’t. The reality is we’re living in a world that looks much more like G-zero: an absence of leadership.”

The conference underscored a consensus that while global market managers and government leaders leaders may have responded to the immediate threats of the financial crisis meltdown, the longer-term drivers of global instability are still very dangerous. “We can conclude that many of the underlying causes of the crisis have actually not been addressed – which is potentially ominous,” said Ann Harrison, professor at University of California, Berkeley, and director of development policy in the Development Research Group at the World Bank.

Frank Dobbin, professor of sociology at Harvard University, discussed political economy issues through the lens of agency theory as the solution to the conflicts of interest between managers and shareholders. In the 1980s and 1990s, he explained, U.S. firms changed their basic approaches to strategy and compensation, governance, and outside monitoring thanks to “agency theory,” an idea pushed by investment fund managers to advocate for shareholder value. In practice, Dobbin said, firms “took up all the prescriptions that would encourage risk taking but not really the ones designed to check risk through incentives and monitoring.”

This failure of global governance was echoed by Professor John Ruggie of Harvard’s Kennedy School of Government. “The global regulatory system, to the extent that we can say that one exists, has fallen well short in providing a social pillar for economic globalization,” said Ruggie. “To make matters worse, the pressure from economic globalization has undermined domestic social pillars, as we see in the disintegration of labor union s in the US. So the governance gap, the misalignment, is made worse over time, rather than better.”

This conference was made possible thanks to the generosity of Sovereign Bank which provides financial support to the Lauder Institute and the Wharton School through Santander Universities Global Division, a major initiative created by Banco Santander to support higher education and advance the bank’s goal of expanding knowledge and experience globally.

A full summary of the conference can be downloaded at:

About the Lauder Institute and the Wharton School

The University of Pennsylvania’s Lauder Institute, founded in 1983, combines a world–renowned Wharton MBA with a Master’s in International Studies. Advanced language and foreign culture training, a two-month in-country immersion, and a Masters Thesis from the School of Arts & Sciences all prepare Lauder Fellows for the ever-evolving global economy. Graduates join the diverse, supportive and committed worldwide Lauder community – continuing a 25-year tradition of international business leadership. The Lauder Institute also offers an MA/JD joint degree. The Lauder Institute is also home to the Penn Lauder CIBER (Center for International Business Education and Research), funded by a grant from the U.S. Department of Education, which provided partial support for this conference. For more information, visit

The Wharton School of the University of Pennsylvania— founded in 1881 as the first collegiate business school — is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. The most comprehensive source of business knowledge in the world, Wharton bridges research and practice through its broad engagement with the global business community. The School has more than 5,000 undergraduate, MBA, executive MBA, and doctoral students; more than 9,000 annual participants in executive education programs; and an alumni network of 88,000 graduates.

About the University of Pennsylvania’s School of Arts & Sciences

The School of Arts & Sciences provides a foundation for the scholarly excellence that has established Penn as one of the world’s leading research universities. The School enrolls 6500 undergraduates, admits approximately 250 students each year into its 32 doctoral programs, and offers a wide range of programs for lifelong learning. International studies are a vibrant enterprise at the School of Arts & Sciences. In addition to offering instruction in 50 languages, the school is home to an array of centers, programs and institutes dedicated to the study of world regions and contemporary global issues and conflicts.

About Santander Universities

Banco Santander’s commitment to progress finds its expression in the Santander Universities Global Division, whose activities through local affiliates, such as Sovereign Bank, fromm the backbone of the bank’s social action and enable it to maintain a stable alliance with the academic world. Santander has forged long-term partnerships with more than 900 universities in Latin America, China, Singapore, USA, Spain, Morocco, Portugal, United Kingdom, Russia and Singapore. Santander Universities USA was introduced in the United States in 2008 through Sovereign Bank and has now resulted in agreements with 21 universities and colleges. The program supported 775 scholarships in 2011. Santander Universities Global Division is the channel through which Banco Santander supports the higher education sector in these countries in such areas as teaching and research, international cooperation, knowledge and technology transfer, entrepreneurial initiatives, student mobility and innovation.