**********************************************************
Following is the speech by the Permanent Secretary for Financial Services and the Treasury (Financial Services), Miss Au King-chi, at the Keynote Luncheon of the Asian Financial Forum 2012 today (January 17):
Good afternoon ladies and gentlemen,
On behalf of the Hong Kong Government, let me extend a warm welcome to you all for joining the second day of the Asian Financial Forum 2012.
I trust you have found the Forum fruitful, with fresh ideas from more than 70 learned speakers, and an impressive audience of more than 2 000 coming from diverse backgrounds and across the miles. Hong Kong, being the freest economy in the world and one of the easiest places to do business, has long acted as a hub for the exchange of information and ideas coming from all parts of the world. It is therefore a fitting platform for discussing the important subject of globalisation, and I am delighted that Professor Joseph Stiglitz has joined us here to do that.
Professor Stiglitz has researched extensively on the theme of globalisation over the years and raised many thought-provoking issues. His book "Globalisation and Its Discontents" credited globalisation as reducing the sense of isolation felt in much of the developing world, and giving many people in the developing countries access to knowledge well beyond the reach of even the wealthiest in any country a century ago. But he also points out that globalisation has contributed to inequality, noting that the top 1 per cent of Americans have seen their income rise by 18 per cent over the past decade while those in the middle have actually seen their income shrink.
Indeed not everyone would benefit from globalisation to the same extent. Take Hong Kong as an example. We have a small domestic market, and virtually no natural resources other than our hardworking and creative workforce. We have been striving for sustainable and balanced growth by embracing globalisation.
Through closer economic and financial co-operation with Mainland China, we act as the gateway for the flow of capital and talent to this emerging economic powerhouse. In parallel, we endeavor to diversify our markets and strengthen our trade and investment ties with other emerging markets, as seen from the two-fold increase in our exports to the "BRICS" economies over the past decade.
Yet we cannot ignore the policy issues arising from increasing economic interdependencies and inequality. Some point out that globalisation has not fully priced in ecological resources like water, energy, natural heritage etc, and market forces perhaps are not effective in tackling these externality issues at both the local and global levels. Any developments fuelled by over-leveraging and over-consumption would not be sustainable. And local shocks may be readily transmitted to others, with greater market volatility worldwide.
It would be tempting to wish to insulate ourselves from adverse external shocks once and for all. But the more sober questions to ask would be "did we in fact underestimate the fragility of globalisation?" and "how can globalisation work better?". In particular, we would need to review critically the global reserve system, monetary policy and regulatory framework, in light of the weaknesses revealed in the latest round of international financial crisis. Professor Stiglitz will no doubt share with us his insights on all these issues.
Let me say a few words about our distinguished speaker today.
Professor Stiglitz was awarded the John Bates Clark Award in 1979. This award is given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field.
He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College at Oxford. Professor Stiglitz served on President Clinton's economic team as a Member and then Chairman of the US Council of Economic Advisors in the mid-1990s, before he joined the World Bank as Chief Economist and Senior Vice President. In 2001, he was awarded the Nobel Prize for Economics for his analyses of markets with asymmetric information.
He was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize. Professor Stiglitz is now University Professor at Columbia University in New York and Chair of Columbia University's Committee on Global Thought.
Ladies and gentlemen, I am sure you are all looking forward to hearing from Professor Stiglitz. Without further ado, I would like to invite him on stage.
Ends/Tuesday, January 17, 2012
Issued at HKT 16:47
NNNN