Promoting inclusive growth
Rajat Gupta a keynote speaker at the 2008 Leaders in Dubai Business Forums speaks to OER about world economics, global currency and corporate social responsibility

Rajat Gupta served as the Managing Director of McKinsey and Company Worldwide from 1994-2003 and is now the Senior Partner Emeritus of Mckinsey & Company. He served as the United Nations Secretary-General’s Special Advisor on UN Reform, is an independent Director of Goldman Sachs, Proctor & Gamble, AMR Corporation and the Qatar Financial Centre, as well as the Chairman of the Board of Genpact and New Silk Private Equity. He is also on the Board of the Rockefeller Foundation.

In his 34-year career in consulting, Gupta served many leading companies on a broad set of topics related to strategy, organisation and operations. He has played a thought leadership role in organisational thinking throughout his career, and led the organisation practice for the firm. during his time at McKinsey. Gupta worked with over 70 per cent of Fortune Magazine’s ‘Most Admired’ list and with over 90 of the worlds top 100 global organisations. Gupta is a keynote speaker at the 2008 Leaders in Dubai Business Forum to be held from November 16-18. He will be speaking on the topic, “Surviving the Rollercoaster of Business – Strategy, Style and Avoiding Disasters Worldwide.”

What are the top three challenges facing the world today (could be political, economic, cultural and social)?
Today’s greatest economic challenge is the need to strengthen the consensus for globalisation within the world’s most prosperous economies, where many voters now seem tempted to embrace protectionist measures that would impede deeper globalisation. The liberalisation of international markets since the fall of the Berlin Wall has spurred global enterprise and has spread prosperity, thus helping lift hundreds of millions of people out of poverty. If the world’s wealthiest nations were to adopt protectionist measures amid a backlash against globalisation, they could undermine the economic gains of the last two decades – a period when an unprecedented number of the world’s poorest citizens have risen towards a middle-class standard of living.

Today’s greatest humanitarian challenge is the danger that communicable diseases will continue to spread among vulnerable populations, despite humanity’s knowledge of how to contain those illnesses. By deploying advanced medical knowledge and asserting our organisational skills – often through public-private partnerships – improved treatment has eased the plight of millions who have suffered from such diseases such as AIDS, malaria and tuberculosis. Finding ways to prevent and treat communicable diseases requires cooperative approaches that combine the legitimising authority of government, the human-services delivery capability of the social and philanthropic sectors, and the organisational power of the business community. Today’s greatest social challenge is building a consensus for concerted action to confront climate change.

How will the current state of global inflation shape the world economy? What can be done to alleviate rising food prices?
The world’s central banks now face the complex task of restraining inflation while encouraging the maximum sustainable rate of economic growth. Even a modest level of inflation, if sustained over time, can depress investment, discourage entrepreneurialism and demoralise both those in the middle class and those who are struggling to join the middle class. At the same time, if vigilant inflation-fighting policies were to become excessive, they might choke off the job creation that society needs. Inflation in food prices – triggered in recent years not just by rising consumer demand for food, but by some wealthy nations’ policies that divert crops toward fuel instead of food - has affected developing nations particularly intensely. Yet because there is no easy solution to rising food prices, governments, food-exporting nations and food-importing nations must cooperate to ensure that supply shortages will not intensify hunger and malnutrition among the world’s poorest.

What are your thoughts on a unified world currency? Is this a viable project?
The success of the Euro has shown that currency unions can succeed, among nations that adopt widely agreed-upon economic policies and ensure the greatest possible economic transparency. However, it has taken decades for the European Union – one of the world’s most productive economic regions – to move toward a single currency. No other regions seem near the point of adopting a common currency, and the idea of a unified world currency anytime soon seems highly unlikely.

What are the primary reasons behind the soaring prices of commodities? What are the long-term effects of this?
The intensifying demand for raw materials in fast-developing nations, such as China and India, certainly accounts for a large part of the recent upward pressure on global commodity prices. Even if a momentary global economic downturn temporarily eases the pressure on commodity prices, the longer-term likelihood is for higher prices for oil and food. It is thus all the more important that governments adopt international agreements to move away from oil – along with other carbon-based fuels – and move toward alternative energy sources that help reduce the pressure on oil prices. And it is equally important to improve the productivity and sustainability of agriculture, to try to provide sufficient food for an ever-more-populous and ever-hungrier world.

How much does corporate social responsibility have to do with the future of globalisation and the climate crisis in general? Should reducing the carbon footprint be a global law rather than a commodity that can be bought and sold – allowing some countries to get away with bad environmental practices?
Corporations have a civic duty to society, in addition to their fiduciary duty to their stockholders: Society rightly expects enterprises to create jobs, provide incomes, design high-quality products and serve civic needs in a responsible way that benefits all their stakeholders. As a constructive and civic-minded force in society, the corporate sector has a responsibility to contribute to the social and political debate over the large-scale issues confronting society – including such macro-level issues as globalisation and climate change in order to ensure that the most creative, sustainable solutions emerge from the public debate.

How can companies grow despite weak economy?
Managing an enterprise through an economic downturn is one of the most difficult tasks a business leader can face. Yet the science of business management offers many techniques that can help companies not just to survive but to thrive, whatever the momentary macroeconomic environment. Devising a strategy that focuses on the long term, and then executing that strategy in ways that also allows for opportune investments, is one of the keys to sustaining a strong enterprise throughout all the fluctuations of a business cycle.

OER is a media partner of Leaders in Dubai forum.

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