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Open markets for a better life

Prosperity is the result of exchange – of ideas, goods, services, and finance. This exchange is constantly increasing nationally, regionally, and globally. Today there are numerous institutions that promote and encourage globalisation. The BDI is a passionate supporter of this process.

The history of humanity is a history of progress. The population growth of the Middle Ages would not have been possible without increasing grain production. And this production could not have grown without the invention of wind and water mills. The same is true of the printing press. Humanism, according to which every person can develop their personality to the best of their ability, arose against the background of an expanding German education system. This would have been unthinkable without the “German art” of printing developed after 1450. Trade routes also played an important role here, carrying products and knowledge to many regions of the world.

Today, trade routes are extended and knowledge is networked like never before. No end to this development is in sight. Firstly, the benefits of worldwide trade – quite contrary to what its name suggests – have not yet reached all areas of the world equally. Secondly, even in the so-called “developed” world, new development is the only constant. Standstill is the exception; and the better is the enemy of the good. A sustainable environment, improved health, and higher quality consumption – we have good reasons to strive after progress and a better life.

The BDI supports the exchange of goods and services, of finance, ideas and people. And where communal efforts are needed to solve global problems, we support finding such solutions.

We do this with an awareness of constant change. Production processes are increasingly organised across state borders and manufacturing steps are shared between multiple businesses. Meanwhile, intermediate products make up 42 per cent of globally traded goods (2014). In the process, globalisation is growing disproportionate to economic performance: since 1980, global economic output has roughly sextupled, whereas world trade has grown nine-fold. However, goods and services account for only a part of cross-border activities: in the same timeframe, cross-border direct investment grew 26 times worldwide and annual investment flows 44 times.

The advantages of greater networking are twicefold: production becomes more economical since specialisation increases. The opening of markets strengthens competition. Both benefit customers. Germany is the best example of this: today, the export of goods and services accounts for roughly half of German value added (in 2014, 45.7 per cent of the GDP). Nearly every fourth job is dependent on exports – in industry, nearly every other job. Germany is clearly a beneficiary of globalisation. The success of German industry is largely based on the openness of our national economy. As one of the leading exporting nations we profit from the deep integration of German industry into international value-added chains.

The further opening of markets is not, however, only in Germany’s interest. In 419 active trade agreements worldwide (February 2016), states have committed themselves to liberalising their trade.

The gains from free trade are also necessary to meet the major challenges of our time: migration flows, climate change, and global health risks.

Functioning financial markets are an important prerequisite for expanding free trade. They are not a goal in themselves, rather the foundation of a successful and stable economy, and hence of prosperity and employment in Germany. Financial markets, like other markets, function best when they are embedded in a carefully thought-out regulatory framework.

In a globalised world, cooperative trade between institutions is equally essential. Global governance is a continuous process in which various interests are balanced against each other. It appears in various forms, such as contracts made under international law (for example, the commercial trade regulations of the World Trade Organisation, WTO). However, informal coordination (such as the G7 and G20 groups) and loose exchanges of ideas (for example, the World Economic Forum) can also contribute to effective global governance. This is importance, since every country’s prosperity depends on developments that cannot only be managed nationally. The networked global economy requires networked economic policy. Only common markets allow prosperity to grow for all.

The BDI’s many activities

Owing to the importance of global framework conditions for the German economy, the BDI is actively engaged in global governance. To allow the voice of German industry to be heard, for example, the BDI brought the “G8 Business Summit” into being.

The BDI is also actively engaged in the Business and Industry Advisory Committee to the OECD (BIAC). The BIAC is a consortium of central OECD organisation and advises the OECD.

A central forum of global governance is the International Chamber of Commerce (ICC), which has existed since 1919. The ICC has observer status in practically all major international organisations. It is closely connected to all kinds of global governance processes, from WTO negotiations to internet governance and to combatting money laundering. Businesses and chambers of commerce are ICC members alongside national trade associations.

The B7, B20, B20 Coalition, BIAC, and ICC support global governance via expertise and a consolidated representation of interests. Through their members they form an important link, not only by supporting international decision-making processes, but also by following how these are implemented on a national level. All their commitments serve the same goal: to improve people’s lives through cross-border trade and finance.

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