Investors are opening their wallets again but their tolerance of risk has been dampened by the crisis, says Jean-Bernard Guérrée, CEO of the World Investment Conference.
Jean-Bernard Guérrée is CEO of the World Investment Conference.
He was speaking to Gary Finnegan.
What will be the focus of the World Investment Conference this year?
This is the eighth year of the conference and we want to look at European attractiveness and competitiveness in a changing world. The conference attracts top-level speakers including the president of the European Council, Herman Van Rompuy, European Internal Market Commissioner Michel Barnier, and Industry Commissioner Antonio Tajani, along with CEOs from blue-chip companies and SMEs.
Is Europe losing competitiveness?
Well, relatively speaking, I think we're losing traction because of the rise of the BRIC countries [Brazil, Russia, India and China]. But the question is how we maintain our own competitiveness and how we can share our own expertise with emerging countries. We have skills and infrastructure in areas like health, so this can help open new markets for European companies.
How useful are these kinds of events in warding off economic crises? Did anyone at previous World Investment Conferences foresee the financial meltdown that has gripped the world for the past two years?
No-one predicted the magnitude of the crisis but there were a few who warned of trouble ahead. That should have been enough to alert us but nobody had the incentive to tackle the problems.
What has happened to investment as a result of the crisis and how do you see the future?
The tolerance for risk has changed but in the long-term there are some positive signs. California has had a record high in the first quarter of 2010 – it's the highest ever level of private investment. It feels like 1999.
California also has deep deficits in its public finances. Does this suggest that public finances are effectively irrelevant to private investors?
Yes. The entrepreneurial spirit in California – especially in places like Silicon Valley – is much more important than the state balance sheet.
So how much impact can policymakers have on enterprise and innovation?
Politicians can design a framework that doesn't interfere with job creation and wealth creation. Bill Clinton did well because he let businesses do their thing and the result was a large number of high-tech companies that changed the way we live.
But didn't the lack of regulation also give us the dot com bubble and sow the seeds for the crash we are now trying to recover from?
Maybe that's the price to pay for progress. Companies that came out of Silicon Valley changed how we live. Look at the impact of Facebook on our lives, and all the other technology that has improved society. The question is whether large investors like pension funds can tolerate losses given the societal benefit for this kind of risky enterprise environment.
In terms of designing an innovative environment, do you think the Europe 2020 strategy can deliver?
Yes, but it's a little bit like a business plan: you write it at the beginning but it's going to change along the way – and that's fine. Google and Facebook and eBay didn't start out planning to become the kinds of businesses they are today. It's better to have a plan – like the 2020 strategy – than not to have a plan. I think it's meaningful, plausible and necessary, and I'm somewhat excited about it. It's a guideline – nobody can predict what the world will look like in 2020, just as it was impossible ten years ago to anticipate how our world would look today.
The policy debate in Europe is increasingly focused on innovation. Do you think this is appropriate?
Yes, but innovation is surely not going to come from policies. It has to come from a state of mind. When he was [French] prime minister, Dominique de Villepin asked me and a handful of other entrepreneurs who left France why we had left. He wanted to know why we took our business ideas overseas, how we viewed France and what would entice us to return. I told him I was 22 when I left and didn't feel France had the right environment for an entrepreneur, so I headed for Silicon Valley.
What was it about California that was more attractive than France or other European countries?
In Silicon Valley, entrepreneurs are heroes. In Europe, most of them are suspects. When you're growing up you want to be a hero, but there are no role models coming to your schools talking about how they created jobs and what they do in the community. We need to make entrepreneurs heroes so that kids want to run businesses instead of aspiring to be fonctionnaires.
How can this be achieved?
We should demystify what an entrepreneur is. We should encourage people to admire entrepreneurs at least as much as soccer players or movie stars. In the US, businesspeople get recognition and they want to give something back.
What role does state support and policies play in this?
It can help, but popular support is the key. It's about recognition. You're not a hero because you got a subsidy from the European Commission. You're a hero because you created 1,000 jobs and sponsor a local soccer team. It starts at five years of age. We also have to change our attitude to failure. In the US it's okay to fail.