Doing
Business in a Globalizing World
Notes for
a speech by the Hon. David Kilgour, Secretary
of State (Latin America and Africa) at the
Croatian Chamber of Economy, Zagreb, Croatia
October 18, 2000
It is a pleasure
to visit Zagreb and Croatia. Many of my
constituents in Edmonton are of Croatian
origin and I have attended many Croatian
cultural events. I have learned about Croatian
culture, folklore and the success and stories
of Croatians and of Canadians of Croatian
origin. The Croatian culture is strong and
vibrant in Edmonton and throughout Canada.
I am here
meeting to assist with the development and
increase business contacts, trade and investment
between Croatia and Canada. Even since the
most difficult days of the early 1990s trade
between our two countries has existed and
has been increasing. During this period,
various Croatian products such as Vegata,
Kras chocolates and wines have been and
are available in Canada. At the same time,
oil and gas equipment, even from my own
constituency, and other products have been
exported to Croatia.
The very
positive developments recently in Yugoslavia
are a particularly important opportunity
for Croatia. With sanctions lifted on Yugoslavia,
a new market re-opens for Croatia that it
already knows and previously purchased Croatian
goods and services.
Canada/Croatia
relations
Croatia stands as a model of reform for
all countries in the region; Canada salutes
these efforts. Croatia has displayed a clear
commitment towards improving human rights,
facilitating refugee returns, and effecting
democratic and legislative reforms.
Your government
and President are to be commended for their
strong support for the International Criminal
Tribunal for the former Yugoslavia (ICTY),
particularly in the face of hostility. Continued
support for the ICTY is critical if a lasting
peace is to be achieved in the region, and
Canada urges Croatia to stand firm against
those who would reverse its commitment to
cooperate fully with ICTY. Croatia’s
renewed commitment to the implementation
and spirit of the Dayton Peace Agreement
is encouraging and has improved relations
with regional countries markedly.
Canada is
committed to assisting Croatia’s efforts
towards fulfilling its international obligations.
Numerous Canadian projects are already underway
to assist Croatia in this work, including
police training, judicial reform, refugee
return, and mine clearance. We look forward
to continued increased cooperation between
our two countries throughout this process.
Our bilateral relationship has never been
better.
Croatia’s
increased cooperation in these and other
areas have sent a clear message to Canada
and to the international community that
Croatia is prepared to do business. This
message has been heard clearly, as is evident
by Croatia’s recent admission into
several important multilateral organizations
(including NATO’s Partnership for Peace).
Canada congratulates
Croatia upon its signature of the Protocol
of Accession to the WTO and we look forward
to welcoming you to the organization. This
represents another mark of Croatia’s
commitment to globalization and will open
the door to greater trade and an internationally
integrated economy.
Globalization
Speaking of globalization, I’ve been
reading Thomas Friedman’s fascinating
book, The Lexus and the Olive Tree, which
dramatizes the conflict between the globalization
system and ancient forces of culture, geography,
tradition and community. Friedman attempts
to find the proper balance between the two.
That is not
an easy task. Globalization: it is a widely
used and abused word and at the same time
a word that has many different meanings.
One thing is certain: globalization is not
something that can be ignored, nor is it
a passing trend. We must learn to accept
it, understand it and make the changes it
brings work for the benefit of all.
As Friedman
notes: "It is not that the system of
globalization explains everything happening
in the world today. It is simply that to
the extent that one system is influencing
more people in more ways at the same time,
it is globalization."
Technology
has made a tremendous impact on the global
economy. It has changed the way we view
the world and the way we do business. E-mail
and the Internet allow us to share information
over vast distances at a fraction of the
cost and effort of even ten years ago. New
markets can be accessed more easily because
of improved communications and mobility.
Just recently I was in the remote forest
area in Dominica in the Caribbean and met
an entrepreneur who was selling traditional
woven mats over the Internet.
With ever
expanding technology comes new markets,
increased demand for products but also greater
competition. Virtually all economists agree
that the large majority of residents of
our ‘shrunken planet’ are considerably
better off through the growth of markets
and the efforts of the GATT and its successor,
the WTO, to keep them open. More than $1.5
trillion is now exchanged in the world’s
currency markets each day, and nearly a
fifth of the goods and services produced
each year are traded.
There are
many opportunities available to increase
international trade. In order for Croatia
to access these opportunities, greater economic
reforms should be sought. In particular,
the liberalization of investment laws would
allow greater hope for foreign investment
in Croatia and stimulate greater economic
growth.
I’d
like to share with you some of what Friedman
calls "Eight Habits of Highly Effective
Countries or Companies." He devised
these points following interviews with senior
executives in successful global companies.
His theory is that since companies and countries
are becoming increasing similar they would
both benefit from the same strategy.
1. How Wired
is Your Country or Company? As I mentioned,
connectivity is becoming the key tool in
the global economy and a defining factor
in the determining the economic strength
of a country. I understand that Croatia
has recently made major strides in becoming
more wired. There are almost 800 000 mobile
telephones in Croatia - many providing e-mail
and internet access. This is in a country
with less than 5 million people. The question
is how does Croatia properly leverage this
resource and ensure that internet access
becomes more accessible and less expensive.
2. How Fast
is Your Country or Company? It’s more
than just the speed of your computer, it’s
the speed at which you can turn an idea
into a product and capitalize on it before
the opportunity has passed you by. As Bill
Gates likes to say, at Microsoft they know
only one thing: In four years every product
they make will be obsolete. The only question
is whether Microsoft will make it obsolete
or one of its competitors. In the former,
Microsoft will thrive; the latter would
be a serious problem.
3. Is Your
Country or Company Harvesting Its Knowledge?
Croatia is fortunate to have a skilled labour
force, many highly educated experts in engineering,
computer technology and medicine. Recent
efforts to provide intensive business management
programs and educating managers, and training
of employees demonstrate Croatia’s
understanding of the importance of knowledge.
Although more needs to be done to take advantage
of these skills as well as the country’s
excellent geographic position.
4. How Much
Does Your Country or Company Weigh? Friedman
explains that this relates to the economic
theory, "the substitution effect",
whereby ideas, knowledge and information
technologies are increasingly substituted
for bulk weight in the creation of economic
value.
The majority
of value today is derived from ideas, knowledge
and information technologies.
5. Does Your
Country or Company Dare to be Open? This
one is simple. An open market allows more
access to potential buyers and investors
and integration in the world network of
ideas and innovations. Economist Jeffery
Sachs and the Harvard Institute for International
Development found in a study that open economies
grew 1.2 percentage points per year faster
than closed economies. This point is particularly
important for Croatia, which is a mall market
and already very integrated into the European
market.
6. How Good
Is Your Country or Company At Making Friends?
Cooperation is a key theme of the new millennium.
In order to tackle the challenges facing
our world today - whether they be financial,
environmental, threats to health or security
-we must all work together. Canada has firmly
embraced this principle working through
numerous multilateral institutions, such
as the United Nations, the Organization
for Security and Co-operation in Europe,
the Commonwealth and the Organization of
American States. I am also pleased to see
that Croatia has quickly become a pillar
of regional stability and will be hosting
a summit of the heads of regional countries
at the end of November.
7. Does Your
Country’s or Company’s Management
Get It? This is very important, as Friedman
writes, ‘Management always matters,
but in this more complex and fast-paced
system, management and strategic vision
matter a lot more.
8. How Good
is Your Country’s or Company’s
Brand? What image does a country’s
name convey? The unique features of a country
attract certain foreign investors in the
same way someone searching for a quality
running shoe will often look for the Nike
swoosh. Croatia’s burgeoning tourism
industry also holds a great deal of potential.
Right in the heart of Europe, in close proximity
to Central European capitals, Croatia offer
tourists many diverse experiences.
While I don’t
agree with all the points Friedman makes
in his book, I think the above-mentioned
have a lot of merit. They are practical
questions that address the reality of today’s
global economy and valuable considerations
for business people like yourselves trying
to tap into new markets.
Canada/Croatia
Business
Canada and Croatia currently enjoy only
modest bilateral trade, but there is clear
evidence of the large potential that exists.
In 1999 Canadian exports to Croatia totalled
C$52.5 million. Our two countries have already
laid the foundations for closer economic
cooperation through the Double Taxation
Agreement and the Foreign Investment Protection
Agreement. Further improvements will be
driven by our business people working together.
Canadian
companies are showing growing interest in
doing business with Croatia, particularly
in the areas of oil and gas equipment, transport
equipment, environmental goods, communications,
energy , construction, tourism and agriculture.
Bombardier is one success story, having
supplied Croatia with numerous water bombers
over the years.
I assume
that the opposite is true as well- and that
Croatian companies are keen on developing
business relations with Canadian companies.
There is much room for growth. In 1999 Canadian
imports from Croatia were C$16.2 million
and included electrical goods, furniture,
machinery and food products. The key is
to make yourselves better known to our business
community. I would strongly encourage you
as business leaders to increase your private
sector contacts in Canada. In order to do
this you might consider sending a business
mission to Canada. Many Canadian businesses
have found such outreach programs to be
extremely helpful in raising their profiles
and in creating new opportunities for themselves.
There are
many potential opportunities for Croatia
in the global economy, including increased
trading relations with Canada. However,
such opportunities will not present themselves
of their own accord; they must be actively
sought out by Croatian business leaders,
which I encourage you to do.
Let me close
with one more story from Friedman’s
book, which I think you will enjoy.
He feels
you can reduce the world’s economies
today to five different gas stations. First
is the Japanese gas station where gas is
$5 a gallon. Four men in uniforms and white
gloves, with lifetime contracts wait on
you, pump the gas, wash the windows, change
your oil and wave at you with a friendly
smile as you drive away in peace.
The second
is the America gas station where gas costs
$1 a gallon. But, you pump it yourself,
wash your own windows, change your own oil
and when you drive around the corner four
homeless people try to steal your hubcaps.
Third is
the Western European gas station. Gas costs
$5 a gallon, there is one man in duty. He
grudgingly pumps your gas, and unsmilingly
changes your oil, reminding you all the
time that his union contract says he only
has to pump gas and change oil. He doesn’t
do windows. He works only thirty-two hours
a week, with ninety minutes off each day
for lunch, during which time the gas station
is closed.
Fourth is
the developing country gas station. Fifteen
people work there and they are all cousins.
Gas is only 35 cents a gallon because it
is subsidized by the government but only
one of the six gas pumps actually works.
The others are broken are they are waiting
for the replacement parts to be flown in
from Europe. The place is always busy, though,
because so many people stop in to use the
air pump to fill their bicycle tires.
The fifth
is the communist gas station. Gas is only
50 cents a gallon, but there is none because
the four guys working there have sold it
on the black market for $5 a gallon.
Thank you.
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