GAC Berlin 2000: The Evolving World Financial System: Linkages Among Economies and Markets

The vast majority of HBS alums at the Berlin conference were from Europe and the U.S., but World Bank President James Wolfensohn, who earned his MBA from the School in 1959, was there to remind them that walls are coming down all over the world.

It's easy, he said, in a time when New York City has more connectivity than all of the developing world put together, to overlook how linked the developed and developing worlds really are.

"But look at what happened in the Asian financial crisis. Disturbances in Thailand, Indonesia, Malaysia, had an immediate impact not just in Cairo and New Delhi but in the financial markets in which we operate." And we're linked, he said, not just by finance, but by communications, technology, environment, immigration, biodiversity, crime and terror.

"This is a dynamic of a world which is a different world than certainly the world of 1932 [when the oldest alum in attendance graduated], even different than the world I graduated in.

"The first thing you have to understand is that there is a connectivity today, a linkage. The title of the conference ["Business Without Walls"] has never been more meaningful than today," said Wolfensohn.

"And most of us are not ready for it.

"We look at Europe and we have a sense of European integration. We look at NAFTA and we get a sense of North American integration." But, he continued, we are not ready for the integration of the wider world.

"And so I put to you as you enter this conference, don't be too narrow in your thinking, because that world will determine whether we live in peace or don't.

"As you think of the challenges of this next millennium, think of them in terms of a planetary world in which the world of developed countries will have only one of six people, and in which the other five-sixths are not behind walls. They're part of our universe.

"You cannot think of the developing world as being outside our world. We have to change our thinking."

What does that mean in practical terms? It means, said Wolfensohn, that when today's business people think about new markets, they must think about the 4.8 billion people in developing economies and what it will take to overcome the continued instability in which many of those economies exist.

It means that it's in all of our interest that what's taking place in Russia and the former Soviet Union today succeeds, that what's happening in Turkey today succeeds, that the worldwide progress toward continued macroeconomic growth and acceptance of market principles succeeds.

It means a world, he said, "in which we have to set some rules and have to deal with issues that can make it more predictable."

"It is at once a huge challenge and a huge opportunity. If we don't bring in the 4.8 billion in that world, they will fall further behind; but if we do it will be a major jump forward.

"My only plea to you is to think in terms not just of the U.S. and Europe, but in terms of the orientation of that marketplace to a world which is five times its size."