Business and the Global Economy: Driving Growth and Innovation | Global Conference 2025

Conference Context and Theme:

• The 28th Milken Institute Global Conference operates under the theme "Toward a Flourishing Future," emphasizing human potential, meaning, and purpose alongside prosperity.
• The panel, moderated by Jerry Baker of The Wall Street Journal, addresses the global economy in an era of disruption, focusing on business-driven growth and innovation.
• Speakers acknowledge a backdrop of geopolitical tension, rising national security concerns, and post-pandemic supply chain resilience efforts that have stalled traditional globalization models.

Globalization and Trade Dynamics:

• Shift in Model: RJ Munger (World Bank) notes that the traditional labor arbitrage model (e.g., manufacturing t-shirts in Vietnam for the US) is fracturing due to domestic political backlash in developed nations over job losses.
• Regionalization Trend: There has been a marked increase in regional and bilateral trade deals over the last decade compared to the previous one, driven by uncertainty surrounding US trade policy and tariffs.
• Opportunity in Crisis: Munger argues that current geopolitical friction provides a political impetus for developing nations to reduce their own tariff and non-tariff barriers, benefiting all parties.
• Intra-regional Growth Potential: While global trade doubled over 20 years, intra-regional trade within Africa, South Asia, and Latin America remains significantly lower than in East Asia or Europe, representing a major untapped growth vector.
• UAE Strategy: Mariam Al Ameri (2.0) highlights the UAE-EU free trade agreement negotiations and the potential for GCC countries to deepen regional economic integration to counter global volatility.

Labor Markets and Demographic Challenges:

• Demographic Disparity: Ajit Mani (World Bank) warns that developing nations will see 1.2 billion young people entering the workforce over the next 12–15 years, yet forecasted job creation in these regions is only 400 million.
• Risk of Instability: This "demographic dividend" could become a "freight train" crisis leading to social unrest or mass migration if 800 million jobs are not created.
• Structural Shifts: Rich Lesser (BCG) and Ajit Mani agree that manufacturing jobs will not return to developed nations in pre-automation volumes; the focus must be on automation, reskilling, and new value chains rather than recreating 20th-century industrial models.
• Key Job Sectors: Five non-outsourceable sectors identified for job creation in emerging markets include:
  • Infrastructure (connectivity, electricity, transport).
  • Agriculture as a business (supporting smallholder farmers with technology and cooperatives).
  • Primary healthcare (creating roles for nurses, diagnostic readers, and PPE manufacturers).
  • Tourism (highest job multiplier: 1 direct job creates 4 indirect jobs).
  • Localized value-added manufacturing (e.g., lithium processing in Argentina rather than raw extraction).

Technology, AI, and Energy Infrastructure:

• AI-Energy Nexus: Mariam Al Ameri and Ajit Mani emphasize that AI development requires massive energy infrastructure, and energy grids require AI for efficiency; the two are inextricably linked.
• Hyperscaler Scale Requirements: A single hyperscaler data center requires 10–20 hectares of space, 100 megawatts of power (equivalent to 100,000 homes), and ~10,000 km of copper cabling.
• Productivity vs. Displacement: Rich Lesser projects that while AI will displace individual tasks, it is currently viewed as a "partnership" tool that augments human leverage rather than fully replacing labor.
• Adoption Rates: Approximately 25% of leading companies feel they have successfully integrated AI into their operations, while 75% are in the early stages of implementation.
• Real-World AI Applications:
  • BCG: Examples include a US insurer, a European automaker, and an Asian mining company using AI for productivity gains.
  • JBS (Gilberto Tomassoni): AI is used for consumer insight, demand forecasting, factory productivity, and animal health monitoring.
  • UAE Government: Targets becoming an AI-driven government by 2027, with AI curriculum integrated into all schools by September 2025.

Investment Mechanisms and Public-Private Partnerships (PPPs):

• Capital Gaps: Multilateral development banks and public funds alone cannot meet the "quantum" required for global development; private sector capital is essential.
• Five Enablers for Private Investment (Munger):
  1. Regulatory Clarity: Governments must provide predictable policies to attract capital.
  2. Political Risk Guarantees: Simplified platforms for insurance and guarantees are needed to de-risk investments.
  3. Junior Equity/Standing: Institutions like the World Bank should take first-loss junior equity to absorb initial risks and catalyze private investment.
  4. Currency Hedging: Mechanisms to manage foreign exchange risk, including swaps with local banks and moving toward local currency lending (currently 44% of IFC lending).
  5. Securitization: Bundling infrastructure loans into standardized, rated securities to attract institutional investors like pension funds.
• Case Studies:
  • Zambia Mining: A PPP between IRH (2.0 partner) and the Zambian government digitized the Mopani Copper Mine, improving safety and efficiency, and creating 2,000 local jobs.
  • Egypt Solar: Beltone (financial) mobilized capital for El Suedi Electric to build the Benban Solar Park, one of Africa's largest.
  • Argentina: World Bank committing $12 billion to support economic growth and local lithium value addition.

Sustainability and Agriculture:

• Food Security as Climate Strategy: Gilberto Tomassoni argues for reframing climate action through food security, noting 2.3 billion people face food insecurity and only <4% of climate investment targets agriculture.
• Smallholder Focus: Small farmers produce 30% of the global food supply; investment must focus on supporting them with biotechnology and AI to increase yield with fewer inputs.
• Biotechnology Integration: JBS is investing in biotechnology for cultivated meat, disease prediction, and developing drought-resistant seeds to complement AI-driven productivity.
• Energy Transition Pragmatism: The UAE advocates a pragmatic transition, acknowledging that some nations require fossil fuels (like gas in Senegal) as a bridge to renewable energy before they can afford a full switch.

Future Outlook and Leadership:

• Insecurity vs. Opportunity: While widespread economic and geopolitical insecurity exists, panelists argue this friction creates the necessary political impetus for bold structural reforms.
• Leadership Pressure: Leaders face unprecedented pressure to balance short-term stability with long-term transformation, requiring deep engagement with citizens and stakeholders.
• Growth Expectations: Speakers express optimism that AI and targeted infrastructure investment can unlock new productivity plateaus, potentially reversing the trend stagnation seen in developed economies.