Conference attendees look for opportunity amidst crisis

“A crisis is a terrible thing to waste.”

This phrase, coined by economist Paul Romer in 2004, was the philosophy of the Fourth Columbia International Investment Conference. The event filled Faculty House on Thursday and Friday with government officials, United Nations representatives, professors, economists, law students, investors, and many more professionals interested in shedding new light on the global economic crisis.

At the conference, jointly hosted by the Vale Columbia Center on Sustainable International Investment, Switzerland’s University of St. Gallen, and the Ministry for Foreign Affairs of Finland, local and international speakers discussed the recession and the role of “foreign direct investment” in sustainable recovery.

According to information provided at the conference, “foreign direct investment” (FDI) flows—the net activity in foreign investments in a given year—were down 15 percent in 2008 and are expected to decline by 40 to 50 percent in 2009. The downturn indicates a decrease in international investments, and shows that countries have been branching out less in light of the economic crisis. This sparked discussion of how to build better capacities for more intelligent investments, along with multiple analyses of the social and political implications of expanding world FDI flows.

The anthem of the discussions on day one was the need for a new framework—a call to action to provide “the greatest good for the greatest number of people,” as one audience member put it. Participants asserted that a new sense of values needs to be integrated into business.

But many disagreed on how to achieve these values. One attendee asked, “How do we ensure that transnational organizations will follow long-term sustainable development rather than short-term goals?” This sparked debate on the role of government regulation of the extent to which contracts and transparency laws can be imposed on companies conducting business overseas.

Karin Lissakers, director of the Revenue Watch Institute and former U.S. director of the executive board of the International Monetary Fund spoke of the state of FDI operations, asking, “How can FDI be an indispensable agent of sustainable development?”

She added that the playing field must be leveled for countries, arguing, “Developing countries get locked into investment deals that no rich country would tolerate.”

This “new playing field” also interested economist and University professor Joseph Stiglitz, who said, “The crisis is likely to change the global economic landscape for years to come,” adding in reference to government bailouts that the “ordinary rules of capitalism have been suspended.”

“Big companies can go into any country knowing that the [U.S] government will stand behind them,” Stiglitz said of a new operating concept in which certain companies are deemed “too big to fail.” This distorted view, he said, has left developing nations at a disadvantage.

“Saving is a virtue. All of a sudden, we’ve turned saving into a vice,” Stiglitz said. “We have a global economy with large capacity and high need.” He pointed out, though, that the problem rests with the fact that the U.S. has not succeeded in properly channeling these savings, thus removing itself as a key player. FDI, he argued, is a potential solution.

Some panelists saw economic impacts as directly tied to global environmental issues.

Lissakers said that FDI by some companies has left an “environmental mess for locals to deal with,” tying into the global climate issues of rising carbon emissions and sustainable development.

“There is a high level of enterprise consciousness that can be built on,” said Jeffrey Sachs, director of the Earth Institute at Columbia and the keynote speaker at the conference. He said he has observed a “growing consciousness” as many big companies approach the Earth Institute for help in developing environmental sustainability. “I think that is a major strategy,” he said.

For some attendees, the conference was eye-opening.

“It was so thought-provoking, just to understand where we are and to be able to take these ideas and apply them to my research and my field,” said Ilze Dubava, an exchange researcher at the Columbia Law School. As she got up from her seat after more than 25 hours in the conference, she added, “I have more than 43 pages of notes.”