The Euromoney Jordan Conference

The EuromoneyJordan Conference

"Finance, Jobs and Resources in the Knowledge Age"

Talal Abu-Ghazaleh

Chairman, Talal Abu-Ghazaleh Organization

(TAG-Org)

The Four Seasons Hotel, Amman, Jordan

May 8 – 9, 2012

"The EuromoneyJordan Conference"

"Finance, Jobs and Resources in the Knowledge Age"

8 May,2012, Amman

Dear Mr. Chairman,Excellencies, Distinguished Friends and Colleagues,

I t is a privilege for me to participate in this Euro-moneyConference gathered to respond to the challenges of the emerging knowledge society, particularly, in a small but dynamic country like Jordan with limited resources and the urgent need to create jobs for its burgeoning youth population.

Let me first outline the global context and the challenge it poses to all countries:

I do not think that l will be exaggerating if I say that we live in an era of revolutionary change around the world in practically every sphere of our lives. Some of these global change-making forces may be transitory, but others are long-lasting and will make a permanent mark on the way we live. In particular, the emerging Knowledge society and economy are creating a new economic and social paradigm that is here with us to stay and poses new challenges and opportunities for countries and companies around the world.

The knowledge economy can simply be described as an economy in which an ever-growing proportion of wealth is generated by the creation, diffusion, use and applications of knowledge and innovation. As the knowledge economy grows it has an impact on all facets of society, changing our lives in a myriad ways not only as individuals but also in our social inter-actions, our economic activities and our political systems .

The knowledge society also opens new perspectives in our understanding of the concepts of “resources” and “jobs”. Today, the conventional concept of resources as “capital” and “ labour” has to be supplemented by “information and knowledge” as an increasingly important resource for generating economic activity, for enhancing productivity and for competing successfully in the global market-place. While capital and finance are finite and are depleted by use, knowledge has the unique ability to grow when it is shared with others in astructured environment. Thus, in a networked economy and society, knowledge grows exponentially, and ownership of information and knowledge is an important source of wealth.

In the knowledge society, jobs also acquire a newand expanded meaning: the quality of existing jobs and work improves rapidly with more readily available information and new applications and innovations in production and services. Knowledge applications generate new working methods and new ways of organizing work and, most importantly, build networks across physical, functional and sectoral boundaries, creating a networked economy and society with vast scope for sharing knowledge and experience and undertaking R & D collectively in a networked environment.

What has been the impact of the tech revolution on jobs?

In the past sixty years, world population has grown from 2.5 billion in 1950 to about 7 billion in 2010. During the same period, global employment has increased three-fold: from 0.9 billion to 2.7 billion. The unemployment gap has thus widened globally, but most of it is accounted for by developing countries who have lagged behind in sharing the benefits of the information revolution.

On the other hand, in the US, while population grew three-fold from 100 million in the last hundred years, the labour force grew almost five-fold from 30 million to 130 million, all of which has been absorbed into the economy by manytechnological advances, the most significant among them in the recent decades being the ICT revolution.

Although globally, there has been rapid job creation in the past few decades, it has not kept pace with the growth in population, particularly, in developing countries. The gap between employment and population has thus widened, especially among the young people across the world. Globally, unemployment has increased from 140 million to 180 million in the last decade alone. And 90 million new job -seekers, who are mostly young, enter the market every year. Youth unemployment has thus emerged as one of the most pressing challenges for all countries: developed, developing and emerging countries alike.

Today, in Spain, 50 percent of the young people under 25, are unemployed and the rate of youth unemployment in countries like France, the United Kingdom and even the US is well above the norm of the past few decades, ranging from 28 percent in France to 11 percent in the US. The world average youth unemployment is estimated at well above 14 percent.

At the same time, paradoxically, the phenomenon of labour shortages has become more and more acute not only in the mature industrial societies, but even in the emerging economies of the South and in some of the developing countries. According to the OECD, by 2030, the EU will face a labour shortage of between 70 to 130 million, the US 17 to 20 million and China upto 10 million.

So, what is behind this anomalous global picture of high youth unemployment and labour shortages co-existing together? one factor is obvious: with rapid population growth in developing countries such as Jordan, the young are entering the market much faster than the rate of job-creation.

But there are other important forces at play: the aging populations in the advanced countries and in some of the emerging economies such a s China. Then, there is the impact of new technologies, including the internet, computerization and robotics , which are changing the nature and geographic distribution of production processes leading to off-shoring and localized low-wage job destruction in labour-intensive sectors. But, at the heart of this anomaly is the widespread mis-match between education and the job-markets.

In this rapidly changing global economic and technological environment, the main deciding factor of competitive advantage of a country is how successful it is in addressing this mismatch between the demand in the job market in the growing knowledge economy and the system of education and training that produces either qualified and trained workers who can meet the demands of the market or only workers with general education which has little relevance to the needs of the new economy. It is indeed revealing that 50percent of firms in developing countries face skilled labour shortages because of the mismatch between skills and jobs.

We all know that over the past two decades, the emerging knowledge economy and society have created entirely new demands in the job markets to a greater or lesser extent in all countries. The internet revolution of the 1990sfollowed by the wild-fire spread of mobile networks around the world in the past decade are stimulating higher wage and better quality jobs not only in the ICT sector but also across the productive and services sectors and creating entirely new sectors and services that did not exist before.

These new sectors include computer research, design and manufacturing, software design, engineering, services and maintenance, website development and web publishing, web-based business applications and transactions, cyber cafes, retailing and recycling and, more recently, the development of mobile platforms for business and financial transactions and many others.

The growth of Web2.0 social networking has in recent years moved the frontier even more towards knowledge society jobs which require a high degree of technical and networking skills to innovate and develop ever new applications and avenues for money-making and growth . And the experience of many countries has shown that provided high quality education, training and R D systems are in place or are rapidly developed to meet the demand, the multiplier effects on productivity and growth can help transform the prospects of a country.

Small countries such as Finland, Singapore, Malaysia. Costa Rica and Jordan itself, which have focused on reforming and recasting their education and training systems, within the constraints of their resources, to meet the demands of the new economy have seen some handsome dividends in employment and growth.

What we need to understand is that in the global networked knowledge economy and society, the creation, diffusion and use of knowledge are increasingly emerging as the single most important resource , replacing capital as the dynamic factor of social development and economic transformation. Knowledge has become the most significant single factor in the struggle for competitive advantage. For countries to succeed in this new environment, the critical component of success is to create, support and develop a system of education, training and R D that respond consistently and effectively to the demands of the market.

Equally important is to foster a favourable and conducive environment to enable new ideas and initiatives to flourish, for new small and medium size enterprises to be created and sustained and for research and development to be an integral component of national development strategies. Creativity, entrepreneurship and a risk-taking culture should no longer be the domains of dynamic individuals or even the business sector alone, a culture of daring to imagine the future we want and then going for it, accepting the attendant risks, should be a key goal of public policy, of the education system, of civil society leaders and, indeed, of the society as a whole.

The new world will belong to those who dare to extend the frontiers of knowledge and then capture them for their own advancement but also for the common good of their fellow-beings. The new world, the knowledge age, confronts us with many challenges:

• Eachandeveryemployeeorworkershouldpreparethemselvestobeaknowledgeagent orknowledgeemployee.

• Essentially,whattheInternet doesis helppeopledothingswiththeirbrainsmoreeffectively,andgetthefruitsof theirbrainsoutintotheworldinamoreeffectivemanner.Thechallengeishowto capitalizebrainactivity.

• Intheoldeconomy,scarcitymeanthighvaluesorhighprices, for example thosewhoowned minesthenmonopolizedtheproductionofacertaincommodityorsomethingthat couldultimatelymakethemveryrich.

• Intoday’sworld,ifyoucannotexportknowledge,youwillnotbeabletoachieve wealth.Thepathtowealthcreationisinknowledgecreation.

• Ifyoutrytospreadandsellknowledge,yourattemptsthentoexercisemonopolyand to“grab”orcontrol“theuniqueknowledge”yourself,willoftenleadtoyourlossofthe “value”.Themostimportantthingthatyoushouldbeconcernedwithis tomakethe buyerbecomepartofthenetworkandthatthenetworkissteadilygrowing.

• Ifyou arenotabletocreateknowledgeandobtainIntellectualPropertyRights,you willcertainlybeunabletoinnovate.

• ThedigitalIntellectualPropertywillbecomethetradeandcorebusiness.

• Inthenext50yearsE-commercewillbecomethemarketplacereplacingthe traditionalmarketplace.

• Theinformationandcommunicationtechnologiescancontribute effectivelyand substantiallytowardsgreatersafetyofmankindandthatofproperty.Notenoughhas beendone toachievethissofar.

But, I firmly believe that the opportunities to be seized are even greater than these challenges. For every adversity creates many new opportunities, if people can think beyond today and tomorrow and keep their eye on the longterm vision of their future.

I thank you.

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