Published – Harvard Business Online
3:57 PM Tuesday December 1, 2009
by Nikos Mourkogiannis | Comments (10)
I just spent a month in Abu Dhabi, the capital of the UAE, and I returned to London impressed by its can-do attitude — an attitude I find in abundance when I travel to emerging markets. Shortly after my departure, the UAE’s growing significance to the world economy became all too apparent when news of Dubai’s debt exposure sent tremors through still-shaky markets. Only the federal government in Abu Dhabi, while remaining censorious of the excesses in its sister Emirate of Dubai, can prevent Dubai World from becoming the Lehman Brothers of emerging markets.
I believe they will do so, though senior officials in Dubai stressed Monday that the government wasn’t obligated to step in. It’s true that Abu Dhabi does not have the legal obligation to intervene, but it does have the self-imposed obligations implied by its leadership of the United Arab Emirates, a country it co-founded in partnership with Dubai in 1971.
The economic leadership of Abu Dhabi to date has been admirable. Yes, they have oil — lots of it — and thus could have simply emulated other oil-rich countries and sent their citizenry for an extended welfare-supported retirement. After all, their populations are relatively small and there was plenty of oil money to go around. Yet Abu Dhabi decided to roll up their sleeves; in the last twenty years they have accomplished what many thought could not be done, growing their GDP from $23.7 billion in 1988 to an estimated $262.2 billion in 2008.
What distinguished Abu Dhabi from the rest of oil-rich states is, in my view, its deep sense of purpose. In my book, Purpose: The Starting Point of Great Companies, I lay out a framework of four different purposes. The one Abu Dhabi has embodied is the purpose of excellence. The can-do attitude fostered by pursuing excellence does not imply constantly struggling to have the biggest or the latest; it dictates big moves to get the best. By thinking long term and making big investments, Abu Dhabi has transformed the desert into an oasis — they have health care and educational facilities that would be the envy of any nation.
Abu Dhabi’s sense of purpose and the can-do attitude it fosters make me optimistic that the bondholders of Dubai World Inc will get their money back and that the markets will continue the much-needed affordable financing of developing countries. Abu Dhabi will see to it.
I believe we have a lot to learn from what has happened in emerging markets in the last twenty years. Some countries succeeded because they had oil, some because they had ideas, but no country succeeded without a concrete sense of purpose. Having a purpose of excellence implies upholding standards irrespective of cost; one cannot preach excellence and not honour obligations towards third parties hiding behind legalities. Purpose, of course, is tested in the hour of crisis. At this hour of crisis, Abu Dhabi has no better compass than its history and sense of purpose.
In the West, we have become disheartened because we started believing that our problems are too big to solve. They are not. It has just been a long time since developed nations have had to try to turn a desert into an oasis.
I agree with Krugman`s column published today in the New York Times. To use the nomenclature I like: Obama Needs A New Campaign; its Purpose should be to create Jobs.
This is a recovery that is working for firms but not for people. Firms have learned how to be more productive by using less labour; admirable gains in productivity, however, make it unlikely that the private sector will be able to absorb the army of unemployed ( 10% of the population) and mobilize the army of the underemployed ( another 10% of the population) any time soon. A lot of those people are likely to become unemployable, as they get deskilled by just staying home. At the same time American infrastructure deteriorates and basic and needed skills are disappearing. Plumbers and electricians are becoming more difficult to find than lawyers and investment bankers. A $40b program for three years to create 1 million jobs for people who want to learn how to fix things would indeed be a great investment. It would also diffuse a social bomb that can explode at any moment during the long journey to rediscover American competitiveness. Nobody- myself included- wants to see his tax money spent to create more government funded jobs.
However, we have reached a point that does not allow us the luxury of choice, but imposes the discipline of common sense. We do not want to support an army of permanently unemployable people among us. The only realistic way of preventing that from happening is by putting them to work on things that are needed. The price of $40b is exactly what we would have to pay to dispatch 40000 additional troops to Afghanistan.
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