Episode Transcript
[00:00:03] Speaker A: Welcome to INA Insights where prominent leaders and influencers shaping the industrial and industrial technology sector discuss topics that are critical for executives, boards and investors. INA Insights is brought to you by Aina AI, a firm focused on working with industrial companies to make them unrivaled segment of one leaders. To learn more about Aina AI, please visit our website at WWINA AI.
[00:00:40] Speaker B: Hi everyone and welcome to another episode of our Titanium Economy podcast series. Today we have the honor of hosting Mr. Carlos Margarinos who is a globally recognized leader in industrial policy, economic development and international relations.
His versatile career spans politics, diplomacy, academia and business, earning him accolades from 39 governments and institutions across the Americas, Europe and Asia.
During his stellar career. At 31, he became Argentina's Secretary for Industry and later at 35, was elected Director General of the United Nations Industrial development organization, securing 36 out of the 53 country votes. Carlos, a very warm welcome to our podcast and very excited to hear your perspectives today, especially on industrial policy.
[00:01:36] Speaker C: Thank you very much. Nidhi, thank you for such a generous introduction. I am very happy to have this opportunity to share with you some thoughts on industrial policy, global economy and I value enormously what you do at INA and the promotion of the titanium economy.
[00:01:55] Speaker B: Perfect. Thank you so much, Carlos. So, to get started, let's talk about the current global landscape for industrials. Right. So how do you view the current state of industrial development across the globe? And in your view, what role should international organizations play in fostering sustainable growth for the sector?
[00:02:18] Speaker C: Well, I think that we are seeing rejuvenation of the industrial policy concept and the industrial policy drive on the global economy. A few years ago when I was at Unido, industrial policy was almost a prohibited word and govern the policy. But nowadays I think governors have recognized the importance of addressing the issue properly. And I think there is a mixture of things contributing to that. Geopolitical tensions on one side, sustainability requirements in another side, technological disruption. Governments understood that they can address these challenges better in partnership with the private sector. I think the recognitions of underappreciated industrial sectors to drive growth through innovation as proposed by the titanium economy is also gaining traction. And I think that's precisely the role that international organizations could play. That role of letting governments and the private sector to work together in a modern approach for industrial development and strengthening the supply of global public goods. I think as national economists, they work and they enjoy the supply of public goods from government and increasingly from an association between governments and private sector institutions and even civil society organizations at the international level. We need the same we need international organizations, global corporations and national entities to work together to ensure the provision of lower public goods and regional public goods that can be understood as strong for facilitating trade, as systems to ensure financial stability and things of the sort.
[00:04:20] Speaker B: And Carlos, as you talked about this rejuvenation of the sector, right. So one thing that has also happened is the emergence of emerging economies. Their role as the industrial development is progressing. Where do you see this heading, especially for regions like Latin America and Southeast Asia?
[00:04:40] Speaker C: Well, I think you mentioned one of the features that define the concept of the global economy. Enter a new phase, even a new era, in the sense that three or four decades ago it was usual to think about developing economies and talk about developing economies, not emerging economies, as a small part of the global gdp, contributing a relatively not small part, but about a third of the global gdp. But now, if you get together developing economies or emerging economies, as we are calling it today, they contribute more than half of the global gdp. And if we consider the power purchase parity, they even contribute more.
So and this is at the same time the reason behind the cause and the effect of the emergence of a new global middle class.
So, and with the center in Asia. And so I think all regions now are seeing they have serious potential to contribute in a meaningful way to the growth of the, of the global economy. Regions like Latin America, for example, they are very abundant in natural resources. They are also strong in terms of the skills of a workforce. But they have to work very, very hard and rapidly on acquiring modern technologies.
South Asia, for example, on the other hand, is driving, is leading in digital transformation. But they have to work also a lot on securing supply chains, on transforming their basic sectors like agriculture and the production of natural resources, where they have also opportunities to interact with another emerging regions. So I think emerging countries are playing an increasingly relevant role and they have to address these structural challenges they have by means of trade associations, trade blocs, negotiations, and the adoption of common standards. And I think international organizations can do a lot to foster that. For the time being, what I'm seeing is international organizations working mostly regionally.
And I think the challenge for the medium term is to move into a cooperation that goes across regions on specific sectors and specific subjects. And I think there is many international organizations thinking on that and trying to address that challenge.
[00:07:33] Speaker B: It's very interesting, Carlos, that you mentioned that all of the, or a lot of the international organizations are still working very regionally. And at the same time there is also because of several external factors like geopolitics and whatnot there's also a rise of nationalism on the other hand. Right? And for industrial policies to work, for industrial development to go to the next level, we do need some kind of global cooperation amongst the economies. So what's your point of view on that? You think that this continued fragmentation of global economy would hinder industrial innovation going forward? Or would you like to see the world work as like more coordinated towards this?
[00:08:20] Speaker C: Truth is what you say, Nidhi, we are entering a phase of a more fragmented globalization process. And with this regard of our wishes, reality imposes many constraints. I think industrial cooperation is not only possible even in that context of nationalism and protectionism, but it's also very necessary. So we need to use these mechanisms provided by the international machinery of the UN and regional bodies, international banks, to get through this challenging phase to keep cooperation alive. This has always been challenging. Even in times where globalization was on the rise and it was a top priority for governments around the world, industrial cooperation was always challenging. There is a lot of competition, but I think there is some areas, as I mentioned before, where countries can cooperate and they could find rational to balance national interest with international win win opportunities. This is as I said, in the area of global financial stability, in the area of mobilization of skills, information and technology, in the area of standards, there is a global race on who is going to set global standards for the future. And I think even in the context of that race we could find areas of cooperation to balance this nationalism and protectionism with international incorporation. We did it before and we need to do it for the future.
[00:10:14] Speaker B: And Carlos, very interesting that you bring up the topic of balancing national interests with like global objectives, keeping in view industrial policy and development. So from your experience over the years, are there any good examples of having done that while negotiating on an international stage? Any insights, any good examples you can share?
[00:10:38] Speaker C: Well, we have examples for example at the European Union, also at the origins of nafta, the North American Free Trade Agreement. You may recall at the beginning of the 19th there was a drive towards regional trade blocs and then this somehow is coming again. And we have examples also at MERCOSUR in Latin America. But there is also many cases at APEC and there is also cases of international agreements which are considering specifically rules and regulations for small and medium enterprises. So I'm going again to my concept, the concept I proposed at the beginning. There is a number of opportunities to work on specific sectors and issues across regions to supply concrete public to ensure that will all win a share of growing GDP cake. Going to concrete examples, I remember A case of Africa exporting certain types of fish to European Union. You know, Africans were working in a very inefficient manner because from time to time, regulations and safety concerns were raised in Europe regarding the fish exports. So we developed a joint program between Europe and Africa to secure safety standards and to enforce health regulations to get the flow of fish exports to stabilize and to give the capacity to predict the evolution of prices to the fish exporters. It worked very well. It replicated in other sectors like telecommunications, where we supply telecom units and devices to small towns in Central Africa to raise productivity, secure communications, facilitate the evaluation of the catch of natural resources or fish or other products to be exported. So there is many practical ways you can solve very concrete problems where everybody wins, those who export, those who import, and the others which are supplying services for both sides.
[00:13:13] Speaker B: Carlos, also going back to another topic that you touched upon in the beginning of this conversation. Sustainability.
So from your perspective, how do you think governments and the private sector can come together to address some of the green imperatives for the sector, for the industrial sector?
[00:13:33] Speaker C: We need more leadership in that sector. And in that particular issue, more leadership is needed. We talk a lot, we establish a lot of benchmarks and test calls, but we need to do more, and governments need to do more by enforcing regulations and securing regulations. The private sector has instruments and tools to comply with. This is very much. Civil society organizations need to be included. I mean, we're not going to address the sustainability challenge by means of government regulations alone or individual actions alone. This, this is perhaps the first example the global economy had to face early in the 90s, when we had the first Earth Summit in Rio de Janeiro in 92, where we are supposed to negotiate an agreement that cannot be implemented by governments, could be negotiated by governments, but then needs to be implemented by companies, which needs to change their productive systems. And it will need the participation of consumers, which needs to adapt their consumption patterns. Therefore, this is very much an issue that requires leadership. That's why we see that young people here or there, they mobilize a revolution in their countries because leadership is needed. So whenever somebody say, look, we need to do that and mobilize the society, people respond. And we need more examples of that sort to secure that, to address the sustainability challenges, which is getting more and more urgent.
[00:15:17] Speaker B: We talk about sustainability, we talk about geopolitics, but I think no conversation about the sector is complete unless we talk about the digital disruptions, the rise of AI and the impact it could have on the manufacturing workforce and the sector overall. So in your mind, how do you think the sector can adopt technology while also ensuring that it secures the manufacturing workforce, especially as automation takes over?
[00:15:52] Speaker C: Well, let me, let me refer there to the very good proposal made in the Titanium economy book. I have read that with great joy and strong interest. And I think there you can see a whole underappreciated industrial sector adopting frontier technologies to increase efficiency and address environmental challenges. What we need to do, the Italian economy is focused in the US economy mostly, but they have examples of other emerging countries as well. We need to expand that analysis to developing countries as well. And we need to secure that we address some of the issues raised in that sort of analysis which are very central to the global economy and the modern economy.
Because one of the reasons this, these small and medium sized companies are underappreciated, it is because those who have evaluated in the financial system, they lack appropriate financial information compile and comparable information for small and medium enterprises. So I think we should work in securing financial information platform for what you call the titanium economy for the US And I would like to expand the concept also this titanium economy for the whole developing or emerging economies. I travel very often to Brazil. I see there Brazilian titanium economy moving very dynamically. And I have seen also that in other emerging countries. I'm just coming from a long trip to Asia, visiting several countries for the World Manufacturing Convention. I have seen there the vibrant capacity of middle sized companies to adopt technology and lead innovation. And I think this is very much needed. Big companies are doing as much as they can. But we need the challenges in this scenario.
We need those that are going to drive integration in the coming years. And if you look back to other process of technological disruption, it is always the same. It starts with big companies, but then there is a group of challengers, medium sized companies which innovate, which are faster to adapt, which keep the big giants moving forward. And also they are prepared, they start to prepare to take the lead in the future. So this, what you asked is very essential.
And I believe we have to learn the lessons of the past and develop stronger financial information systems to secure that financial markets could look into these companies in a more dynamic way. I believe that's a challenge that can be addressed. And it's one of those global public goods I mentioned before.
I mean global institutions could work on that, regional institutions could work on that. And there's also, there's certainly many challenges to secure financial information platform for the titanium economy. But we can do it together. We can work together in the concept and we can develop a stronger system to enable innovators all around the world to participate in a more meaningful way of the global economy.
[00:19:46] Speaker B: That's actually a great idea, Carlos, to expand sort of the analysis outside of the US and define the titanium economy. What does it mean globally and how has it performed historically? So getting that financial information indeed would be very helpful. But in your view, Carlos, today, so let's say, especially in emerging economies, what do you think is the key challenge that some of the companies face or the government faces in getting the right data to make decisions on industrial policy?
[00:20:20] Speaker C: I think that information is much better than before, but still fragmented. So we need to work very much on the information flow because sometimes governments, they take decisions on outdated information and sometimes small and medium sized companies, they simply lack the capacity to process all the signals coming through financial systems and other neural systems of a global economy. So I think it is very important today that we balance this information to ensure that all participants, all actors balance their actions on the proper assessment of the situation. Because today, on top of efficiency matters, efficiency issues, other issues start to play a role.
These geopolitical tensions, they are triggering actions on near shoring or friend shoring to secure the supply chain from disruptions. So there is also elements related to securing the workforce and industrial sector, which requires certainly upskilling and reskilling locally. So these are several issues that affects the economic ecosystem in the medium term that needs to be addressed and requires proper information. I listen very often, look, listen to help marginalized sectors or low income sectors, we should ensure they receive education. And that's certainly very true. But education, if we understand it and understood it last century, is not necessarily what we need for the future because technical knowledge, it gets updated very rapidly, very fast. What you learn today, for example, at the University of Engineering, could be outdated in two or three years simply for technological disruption. So all these sort of things needs to be addressed. And I, and I face that very often when I talk to governments and companies around the world.
They still very much thinking in terms of the 20th century, they are adapting fast, but we need to move this issue rapidly to ensure that we deal with a proper set of indicators for a very fragmented work which is moving very rapidly.
[00:23:09] Speaker B: Makes sense. So, Carlos, to close this wonderful conversation, it's great to see that you are one of the proponents of the titanium economy and the work we do in trying to shine the light on the industrial sector. From your perspective, what do you see as the future of this sector? Not just in the U.S. of course, globally, especially with all of the work that you've done throughout your career on industrial policy and development, I think you're.
[00:23:37] Speaker C: Doing a great job. That's why I'm very supportive of the concept. I adopted the concept myself for my speeches everywhere, giving due recognition to the authors because I believe you are touching upon the very sensitive issue. We need this titanium economy to grow and develop and we need to be given more attention because I think it is there where we have a great opportunity of growth and also an opportunity to match economic interest with social interest, which will be a key issue for the future.
I think that the titanium economy has the capacity to help bridge these needs of a population at large, to see economic growth, to operate in their pockets, in their daily lives. Sometimes we see growth process of national economies going well, but populations getting angry for distribution issues, for issues related to sustainability.
And I think I have advocated that in my writings many years. You know, we need to work with those which are close to the, to the people. I have advocated for government levels close to the people, you know, municipalities, city, towns. And the same happened with the economy. Those companies which are working in their area, in their towns, with their communities, they grew faster and they were more equitable. And those are the companies which make, which give lives to the titanium economy. That's why I find the concept so interesting and deserving attention. And I think it could play a very good role to ensure that the economic growth process and the population get together again.
[00:25:29] Speaker B: Indeed, that's what we, we wish for. Thank you so much, Carlos. This was a wonderful conversation and thank you for making time for being with us on our Titanium Economy podcast.
[00:25:41] Speaker C: Thank you. Thank you for interviewing me and giving me this opportunity to share some thoughts.
[00:25:52] Speaker A: Thanks for listening to INA Insights. Please visit INA AI for more podcasts, publications and events on developments shaping the industrial and industrial technology sector.
