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Larry Diamond
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The toppling of Egypt's modern-day pharaoh through peaceful mass protests, aided by Facebook and Twitter, marks a watershed for Egypt and the entire Arab world. Contrary to widespread anxieties in the U.S. foreign policy establishment, it will also serve the long-term interests of the United States - and Israel.

Many analysts of Egypt have been warning for years that the status quo under Hosni Mubarak was not sustainable. A repressive and deeply corrupt dictatorship was sitting on top of a social volcano - an increasingly young, urbanized, digitally connected population seething over the lack of freedom, dignity and economic opportunity. A quarter of Egypt's working-age youth are unemployed and many more under-employed. Over the past two decades, average incomes in Egypt stagnated while they doubled or tripled elsewhere in the region.

Think of what could have happened. Many observers (including myself) worried that the growing alienation of young Egyptians might flow in anti-American, anti-Israeli and radical Islamist directions. The inevitable eruption could have turned violent, resulting in the kind of bloody suppression that gripped Algeria in the early 1990s, when 200,000 died. Or it might have been hijacked by radical Islamists who would ride the popular revolution to power, as in Iran in 1979.

So far, none of these have happened. The millions of Egyptians who have poured into the streets of Cairo and other cities have not been chanting "down with America," nor have their protests been about Israel (or the Palestinians). Rather, they want freedom, justice and accountability in Egypt. They have mobilized for democratic change with extraordinary discipline, imagination and moderation. In the face of killings, provocations, arrests and torture, they have adhered to nonviolence as a sacred principle.

In achieving the first condition for Egypt's liberation, the departure of the pharaoh, through peaceful grassroots mobilization, a huge chip has been lifted from their shoulders. Now Egyptians feel a new sense of pride, confidence and empowerment. And they are beginning to view the United States in a fresh and more hopeful light, not because of President Obama's Cairo Speech in 2009 but because of what he said and subtly did in the last two weeks (after several rhetorical blunders by some in his administration). As the mass protests grew, Obama aligned the United States more explicitly behind the goal of peaceful democratic change, warned the regime against the use of force, and urged Mubarak to step aside. The experience could mark a turning point not just for Egypt but for Barack Obama personally. He now has the chance to nurture democratic change in the Arab world through artful diplomacy and timely assistance, where George W. Bush failed with blunter rhetoric and means.

Israel as well should be reassured by developments so far. Egypt's new (and hopefully temporary) military junta has quickly reaffirmed the country's treaty obligations. Few protesters are calling for abrogation of Egypt's peace with Israel. Most protesters resent Israel's treatment of the Palestinians and want an independent Palestinian state, but mainly they want to transform their own country politically and economically. They know their aspirations for human dignity and economic opportunity can only be met with far-reaching internal reforms, and that the worn-out theme of anti-Zionism is a divergence from that. Israel and its friends should thus welcome democratic change in Egypt. The only way to guarantee a lasting Middle East peace is to root negotiated agreements in the same democratic legitimacy that undergirds the stability and resilience of Israel's political system. As Thomas Friedman recently observed, it is a better bet to make peace with 82 million people than with one man.

The challenge now is to ensure that Egypt's revolution produces a genuine pluralist democracy. This is far from assured.

Egypt's military rulers may well seek to sabotage the transition and restore the old order with a slightly more democratic façade. Or the Muslim Brotherhood (which rejects violent means but clings to Islamist political ends) could gain the upper hand in popular mobilization or elections. But the second scenario will be much more likely to follow, rather than prompt, the first. If a democratic transition unfolds seriously and peacefully through negotiations and reform, and if democratic institutions are well designed, the Muslim Brotherhood will be a significant but minority player.

For Egypt, Mubarak's fall is only the first step along a tortuous path. If its transition leads to democracy, it will produce a much more reliable partner for peace and progress in the Middle East. That is why other democracies in the world should support it in every way possible.

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The Japanese economy has been stagnating for almost two decades. During this event, Takeo Hoshi will describe the findings of a report that he co-authored with Anil Kashyap of the Booth School of Business at the University of Chicago, the National Bureau of Economic Research (NBER), and the Federal Reserve Bank of Chicago. In the report, Hoshi and Kashyap utilized the neoclassical growth model in order to try to explain the causes of this stagnation and to identify policy choices that might help restore growth. Their focus was intentionally on longer-term issues, rather than the immediate challenges that are associated with the fallout from the global recession.

Looking at financial globalization and the collapse of the fixed exchange rate regime they found that by the end of the 1970s Japan could not rely on an undervalued currency to boost its exports. It had to rearrange its production system and other economic institutions to cope with globalization to reduce its reliance on external demand.

Japan's population structure was shifting and becoming increasingly elderly. Aging meant slower growth of the labor force. Declining fertility combined with aging eventually reduced the domestic saving that supported economic expansion during the rapid economic growth period.

Finally, monetary and fiscal policy performed poorly. The Bank of Japan consistently undershot its inflation objective. The government pursued massive fiscal stimulus during the 1990s and 2000s, so much so that Japan went from having the best debt position amongst advanced economies to the worst.

Hoshi is a Pacific Economic Cooperation Professor in international economic relations at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego. He is also a research associate at the Tokyo Center for Economic Research, and is on the board of directors for Union Bank. His major research area is the study of the financial aspects of the Japanese economy, especially corporate finance and governance.

He is a recipient of the 2011 Reischauer International Education award, the 2006 Enjoji Jiro Memorial Prize, and the 2005 JEA-Nakahara Prize. Among his many publications is Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001), which received the Nikkei Award for the Best Economics Books in 2002.

Philippines Conference Room

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Former Henri H. and Tomoye Takahashi Senior Fellow in Japanese Studies at the Freeman Spogli Institute for International Studies
Former Professor, by courtesy, of Finance at the Graduate School of Business
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Takeo Hoshi was Henri and Tomoye Takahashi Senior Fellow at the Freeman Spogli Institute for International Studies (FSI), Professor of Finance (by courtesy) at the Graduate School of Business, and Director of the Japan Program at the Shorenstein Asia-Pacific Research Center (APARC), all at Stanford University. He served in these roles until August 2019.

Before he joined Stanford in 2012, he was Pacific Economic Cooperation Professor in International Economic Relations at the Graduate School of International Relations and Pacific Studies (IR/PS) at University of California, San Diego (UCSD), where he conducted research and taught since 1988.

Hoshi is also Visiting Scholar at Federal Reserve Bank of San Francisco, Research Associate at the National Bureau of Economic Research (NBER) and at the Tokyo Center for Economic Research (TCER), and Senior Fellow at the Asian Bureau of Finance and Economic Research (ABFER). His main research interest includes corporate finance, banking, monetary policy and the Japanese economy.

He received 2015 Japanese Bankers Academic Research Promotion Foundation Award, 2011 Reischauer International Education Award of Japan Society of San Diego and Tijuana, 2006 Enjoji Jiro Memorial Prize of Nihon Keizai Shimbun-sha, and 2005 Japan Economic Association-Nakahara Prize.  His book titled Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001) co-authored with Anil Kashyap (Booth School of Business, University of Chicago) received the Nikkei Award for the Best Economics Books in 2002.  Other publications include “Will the U.S. and Europe Avoid a Lost Decade?  Lessons from Japan’s Post Crisis Experience” (Joint with Anil K Kashyap), IMF Economic Review, 2015, “Japan’s Financial Regulatory Responses to the Global Financial Crisis” (Joint with Kimie Harada, Masami Imai, Satoshi Koibuchi, and Ayako Yasuda), Journal of Financial Economic Policy, 2015, “Defying Gravity: Can Japanese sovereign debt continue to increase without a crisis?” (Joint with Takatoshi Ito) Economic Policy, 2014, “Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan” (with Anil Kashyap), Journal of Financial Economics, 2010, and “Zombie Lending and Depressed Restructuring in Japan” (Joint with Ricardo Caballero and Anil Kashyap), American Economic Review, December 2008.

Hoshi received his B.A. in Social Sciences from the University of Tokyo in 1983, and a Ph.D. in Economics from the Massachusetts Institute of Technology in 1988.

Former Director of the Japan Program at the Shorenstein Asia-Pacific Research Center
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Takeo Hoshi Pacific Economic Cooperation Professor in International Economic Relations Speaker Graduate School of International Relations and Pacific Studies, University of California, San Diego
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Food and agricultural policy experts Prabhu Pingali and Philip Pardey will each speak on trends in productivity and investments in technology, survey of constraints to productivity, incentives and investment, and opportunities to raise productivity.

The Green Revolution - past successes, unfinished business, and the way forward

Pingali will review strategic components of the Green Revolution and its achievement and limits in terms of agricultural productivity improvement and broader impact at social, environmental and economic levels, including its impact on food and nutrition security. Lessons learned and the strategic insights these provide will be reviewed as the world is preparing a "redux" version of the Green Revolution with more integrative environmental and social impact combined with agricultural and economic development. Pingali will also point to core research & policy gaps that can enhance further spread and sustainable adoption of productivity enhancing technologies.

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Prabhu Pingali is the Deputy Director of Agricultural Development at the Bill and Melinda Gates Foundation. Formerly, he served as Director of the Agricultural and Development Economics Division of the Food and Agriculture Organization (FAO) of the United Nations. Pingali was elected to the U.S. National Academy of Sciences as a Foreign Associate in May 2007, and he was elected Fellow of the American Agricultural Economics Association in 2006. Pingali was the President of the International Association of Agricultural Economists (IAAE) from 2003-06. Pingali has over twenty five years of experience in assessing the extent and impact of technical change in agriculture in developing countries, including Asia, Africa and Latin America.

 African Agricultural R&D and Productiivity Growth in a Global Setting

Given the continuing importance of agriculture in most African economies, an in-depth understanding of the past and likely future productivity performance of African agriculture is key to assessing the overall economic growth and development prospects of the region. African agriculture operates in increasingly interconnected global commodity markets, so the relative productivity performance of African vis-à-vis rest-of-world agriculture is also relevant. This talk will present new evidence on African agricultural productivity performance and place that evidence in relation to the evolving pattern of agricultural productivity growth worldwide. Technological change is a principal driver of productivity growth, and new, updated evidence on the trends in R&D investments that give rise to these technological changes will also be presented and discussed. The productivity effects of R&D play out over comparatively long periods of time demanding a long-run look at these developments.    
 

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Philip Pardey is Professor of Science and Technology Policy in the Department of Applied Economics, and Director of the University of Minnesota's International Science and Technology Practice and Policy (InSTePP) center. His research deals with the finance and conduct of R&D globally, methods for assessing the economic impacts of research, and the economic and policy (especially intellectual property) aspects of genetic resources and the biosciences. He is a Fellow of the American Agricultural Economics Association and a Distinguished Fellow of the Australian Agricultural and Resource Economics Society.

Bechtel Conference Center

Prabhu Pingali Deputy director, Agricultural Development Speaker Bill & Melinda Gates Foundation
Philip Pardey Professor of Science and Technology, Applied Economics Speaker University of Minnesota
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What does price instability have to do with food security? Price spikes hurt poor consumers, price collapses hurt farmers, and price risks reduce investment. Timmer's work suggests that food price instability also has a deeper and more insidious impact: it slows down economic growth and the structural transformation that is the pathway out of rural poverty. Food price instability really hurts the poor in both the short run and the long run.

"Food security is not a viable social objective unless it is also a profitable undertaking for input suppliers, farmers, and marketers of output. Consumers must then be able to afford to purchase this food, secure in the knowledge that it is safe and nutritious. Achieving food security within these constraints of a complex economic system is a challenge because both poor consumers and small farmers must be effective participants."                                     -- Peter Timmer

Thom Jayne, Professor of International Development at Michigan State University, will join the conversation as a discussant following the main presentation. 

Biography

C. Peter Timmer is a leading authority on agriculture and rural development who has published widely on these topics. He has served as a professor at Stanford, Cornell, three faculties at Harvard, and the University of California, San Diego, where he was also the dean of the Graduate School of International Relations and Pacific Studies. A core advisor on the World Bank's World Development Report 2008: Agriculture for Development, Timmer also works with several Asian governments on domestic policy responses to instability in the global rice market. He is an advisor to the Bill and Melinda Gates Foundation on agricultural development issues.

Bechtel Conference Center

Center on Food Security and the Environment
Encina Hall East, E400
Stanford, CA 94305

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Thomas D. Cabot Professor of Development Studies, Emeritus, Harvard University
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C. Peter Timmer was a visiting professor at Stanford's Center on Food Security and the Environment in 2007. He is a leading authority on agriculture and rural development who has published widely on these topics. He has served as a professor at Stanford, Cornell, three faculties at Harvard, and the University of California, San Diego, where he was also the dean of the Graduate School of International Relations and Pacific Studies. A core advisor on the World Bank's World Development Report 2008: Agriculture for Development, Timmer also works with several Asian governments on domestic policy responses to instability in the global rice market. In 1992, he received the Bintang Jasa Utama (Highest Merit Star) from the Republic of Indonesia for his contributions to food security. He is an advisor to the Bill and Melinda Gates Foundation on agricultural development issues.

Timmer's work focuses on three broad topics: the nature of "pro-poor growth" and its application in Indonesia and other countries in Asia; the supermarket revolution in developing countries and its impact on the poor (both producers and consumers); and the structural transformation in historical perspective as a framework for understanding the political economy of agricultural policy. 

Peter Timmer Thomas D. Cabot Professor of Development Studies, Emeritus, at Harvard University Speaker
Thom Jayne Professor of International Development Commentator Michigan State University
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East Asia's demographic landscape is rapidly changing and comparative academic research is crucial to help guide well-informed decisions in the many policy areas that are affected, such as security, economics, and immigration. From January 20 to 21, the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC) gathered subject experts from numerous fields for two days of lively and productive presentations and dialogue to help identify key research issues and questions for its new, three-year research initiative on this significant subject.

Shorenstein APARC held a public panel discussion on January 20, featuring eight scholars from across the United States and Asia. The issue of aging featured prominently in their presentations, as did fertility rates and immigration. A full audio recording of the panel discussion is available on the Shorenstein APARC website and summaries of the presentations follow below. A closed-session workshop took place the next day, the discussions from which will serve as the foundation for future programs and publications related to the research initiative.

January 20 Panel Discussion Presentations

The link between demography and security is more tenuous in East Asia than in other parts of the world, suggested Brian Nichiporuk, a political scientist with the RAND Corporation. Nichiporuk discussed possible policy responses to demographic change in Japan, North and South Korea, the Russian Federation, and China. He suggested, for example, that Japan's new maritime security focus is related to perceived economic and political competition from China, which is magnified by its domestic demographic concerns.

Michael Sutton, a visiting fellow with the East-West Center in Washington, DC, stated that Japan's aging population would remain a major policy issue for the next 20–30 years. He emphasized that the policy challenges posed by this phenomena are complicated by the role that the United States plays in the regional security structure, and also by the growing dominance of China and the history that it shares with Japan. Nonetheless, maintained Sutton, despite the obvious challenges, it is possible for Japan and the other countries facing this demographic issue to successfully adapt.

Social attitudes and policy in East Asia do not favor immigration, as they do in European countries such as Spain and Italy, suggested John Skrentny, director of the Center for Comparative Immigration Studies at the University of California, San Diego. Skrentny focused his talk on low-skill immigrant workers in South Korea and Japan, noting that these two countries, which began receiving workers in the 1970s and 1980s, commonly associate immigrants with social disruption. According to Skrentny, immigration policy is often tied to economics and tends to favor co-ethnic workers.

Chong-En Bai
, chair of the Department of Economics at Tsinghua University, discussed numerous economic policy implications and responses related to demographic change in China. He noted areas where successful policies have been adopted but challenges still remain, including savings and investment, labor and urbanization, pension, healthcare, and long-term care. Bai described, for example, how the children of rural migrants now have access to urban schools, but that they still face the logistical challenge of having to travel back to their home provinces to take college entrance examinations.

Examining demographic change and health improvements is essential to understanding the significant economic growth in East Asia over the past several decades, emphasized David Bloom, chair of the Department of Global Health and Population at Harvard University. He noted the success of East Asian countries in lowering their infant mortality rates through investment in public health improvements, such as sanitation and vaccination. Bloom suggested that these and other past successful policy mechanisms have run their course, and that it is now imperative to find ways to address the region's key demographic issue of aging.

Naohiro Ogawa, director of the Population Research Institute at Nihon University, described findings from the National Transfer Accounts (NTA) project, an international effort to gauge economic flows across age groups. He discussed the pressure placed on Japan's working-age population by the increasing cost of caring for children and the elderly, as well as the challenges and possibilities related to having a large, healthy, aging population. Ogawa noted that institutional responses to demographic change, such as increasing the retirement age and adopting more open immigration policy, have moved slowly in Japan.

Andrew Mason, a professor of economics at the University of Hawai'i, Manoa, also utilized NTA data to make predictions about East Asia's economic future. He proposed that the amount of human capital, such as the money that parents spend on the education of their children, is likely to grow quite rapidly. He also suggested that financial wealth in East Asia is likely to increase significantly as the populations of its countries age. Finally, he suggested that the current trend of regional economic growth would continue, although at a somewhat steadier rate. Mason qualified his predictions with questions, such as whether the return on investment in education would be commensurate with what is spent.

James Raymo, a professor of sociology at the University of Wisconsin-Madison, described a wide array of findings about changes in fertility and family structure in Japan and their connections, as well as possible policy implications. Raymo discussed trends in marriage, childbearing, divorce, non-marital cohabitation, and the participation of women in the labor force. He pointed to gaps in current research, and suggested possible linkages to research on other demographic trends, such as Japan's aging population.

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China is becoming increasingly urbanized as the government adopts policies to encourage migration from the countryside. Rural migrant families face challenges amidst the new urban opportunities. | Sarah Lin Bhatia
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About the event

On Tuesday, March 1, SPRIE and Alibaba.com hosted “Entrepreneurship in the Global Marketplace,” a seminar featuring noted venture capitalists, entrepreneurs and executives. The seminar was the first in a series being conducted at several California universities under the auspices of the Schwarzenegger Emerging Entrepreneur Initiative.

Famed venture capitalist Tim Draper kicked off the event, sharing his insight on trends and strategies relevant to global business.  Multiple facets of China’s role in supporting and enabling entrepreneurial ventures were spotlighted, including the presentation of new research on the rise and global impact of Chinese e-commerce, a talk by an executive from Chinese e-commerce giant Alibaba.com, and lessons from a diverse set of entrepreneurs whose businesses depend on international trade. Additional perspectives were shared by China- and U.S.-based VCs.

This event was one of many being held at Stanford University during Entrepreneurship Week 2011, including compelling lectures, workshops, mentoring sessions, a job fair, and more. See full details at the Stanford Entrepreneurship Week website.


About the hosts

The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) is dedicated to advancing the understanding and practice of innovation and entrepreneurship in leading high technology regions in the global economy. Through and international and interdisciplinary research, publications, executive education, and conferences, SPRIE impacts the arenas of academia, policy, and business.

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Alibaba.com is a publicly-traded company (HK:1688) focused on facilitating global trade and entrepreneurship through e-commerce for small businesses with more than 56 million users across 240 countries.

The Schwarzenegger Emerging Entrepreneur Initiative is a program to spur entrepreneurship and stimulate job growth in California, created by Alibaba.com in partnership with former Governor Arnold Schwarzenegger. Through a series of interactive events, the initiative aims to provide 3,000 California university students with guidance, skills and entrepreneurial know-how to start their own businesses and participate successfully in the knowledge-based networked economy.

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Timothy C. Draper Founder Speaker Draper Fisher Jurvetson
Tami Zhu Head of International Business Development and Marketing Speaker Alibaba.com Americas

BDA China Ltd
#2908 North Tower, Kerry Centre
1 Guanghua Road
Beijing 100020, China

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Senior Advisor for China 2.0 Project
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Duncan Clark is Chairman of BDA China, a consultancy he founded in Beijing in 1994 after four years as an investment banker with Morgan Stanley in London and Hong Kong. Over the past 19 years, Duncan has guided BDA to become the leading investment advisory firm in China specialized in China's technology, internet and e-commerce sectors.

An angel investor in mobile game app developer Happy Latte and digital content metrics company App Annie Duncan has also served on the Advisory Board of Chinese internet company Netease.com (Nasdaq: NTES) and serves on the Advisory Board of the Digital Communication Fund of Geneva-based bank Pictet & Cie.

A UK citizen, Duncan was raised in England, the United States and France. A graduate of the London School of Economics & Political Science, Duncan is a Senior Advisor to the ‘China 2.0' initiative at the Stanford Graduate School of Business’s Stanford Program on Regions of Innovation and Entrepreneurship, where he was invited as a Visiting Scholar in 2010 and 2011.

Duncan is partner in a Beijing-based film production company CIB Productions, and Executive Producer of two China-themed television documentaries including ‘My Beijing Birthday’.

Duncan was appointed Officer of the Order of the British Empire (OBE) in the 2013 New Year Honours for services to British commercial interests in China.

Duncan Clark Visiting Scholar Speaker SPRIE
Mike Effle CEO Speaker Vendio
Marguerite Gong Hancock Associate Director Speaker SPRIE
William F. Miller Co-director Speaker SPRIE
Jonathan Ross Shriftman Co-founder Speaker Solé Bicycle Co
Ryder Fyrwald Vice President of Global Operations Speaker Kairos Society
Sanjay Subhedar Managing Director Speaker Storm Ventures
Hans Tung Partner Speaker Qiming Ventures
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In today's networked information economy, Yochai Benkler suggests, the most important inputs into the core economic activities of the most advanced economies are, for the first time, widely distributed in the population. Examples of decentralized or peer production are increasingly common, with Wikipedia just one among the list of notable examples. In contrast to the old model, in which all parties needed large-scale capital investment to influence the public space, Benkler suggests that today's networked public sphere has fewer barriers to entry. The groups that have traditionally influenced the public sphere include commercial interests (representing the power of money), government (which influences through funding, access, and threats, representing the power of power), parties, citizens, and a final group of civil society actors (i.e. professional values, journalism and universities). In Benkler's view, these categories of power have been destabilized by the spread of new means of social sharing and exchange. Today, authority, quality and accreditation are separate to capital due the addition of many new groups and platforms, including examples such as the following:

  • Pro Publica, American Independent Media
  • New highly visible blogs
  • Sunlight Foundation
  • Wikileaks
  • Large-scale participatory platforms for politically active participants
  • Citizen journalism, camera phones, and footage

Benkler notes that many critiques have arisen to the argument that the Internet democratizes. For example, some claim that new parties can talk on the Internet, but no one will necessarily hear them. Not only is very little attention actually paid to politics online, but links between sources are also very concentrated. Additionally, there is the question of whether the blogosphere simply offers a new version of elitism, in which the top bloggers come from similar backgrounds to those who formerly dominated the public sphere.

However, Benkler argues that the Internet does make the public sphere more democratic after all. The structured web offers more visibility to more people, in accreditation and filtration clusters. Speakers on the periphery can be identified by major sites and broadcast iteratively to higher-level visibility. On Daily Kos, for example, people are able to bring posts of interest forward onto the home page. All of this occurs with relatively little financing.

In their 2010 paper, Benkler and Shaw explored patterns among the top 155 political blogs, applying link analysis and other methods to explore differences between bloggers on the political left and on the political right. They found that the left adopts enhanced platforms much more quickly and has more flexible content boundaries--a measure of how easy it is for bloggers on the periphery to have their content taken up. While the right has more sole-author blogs, the left has more user blogs available and more large-scale collaboration (exemplified by blogs with more than 20 writers). The authors found that there was no single effect of "Liberation Technology" in this case, in that the left and right showed divergent practices. While Benkler concedes that a link analysis is only so useful without full content analysis, he also notes that the results are consistent with social cognition literature on the differences between people on the left and the right. Another explanation, however, comes from the theory that there was more need for the left to embrace the blogosphere in 2002; when technology first became available, the right dominated the government, news, and already had a platform for discussion in churches. Seeking a new forum for discussion and debate, the left seized on the blogosphere as a solution.

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Frank Wolak
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Any mention of climate policy was noticeably missing from President Obama's recent state of the union address. This is unfortunate because every day of inaction on climate policy by the United States government is another day that American consumers must pay substantially higher prices for products derived from crude oil, such as gasoline and diesel fuel. Moreover, a substantial fraction of the revenues from these higher prices goes to governments of countries that the US would prefer not to support.

So, what is the cost of a single day of delay? US crude oil consumption is approximately 20m barrels per day and roughly 12m barrels per day are imported. An oil price that, because of climate policy uncertainty, is $20 a barrel higher than it would otherwise have been implies that US consumers pay $400m per day more, of which $240m per day is paid to foreign oil producers. Dividing these figures by the United States population implies that every US citizen is paying about $1 per day more for oil - and more than half of that may be going to an unfriendly foreign government.

Why does this climate policy price premium exist? It is not due to a dearth of readily available technologies for producing substitutes for conventional oil. A number currently exist that are economic at oil prices significantly below current world prices of $80-90 per barrel. Several even have the potential to scale up to replace a large fraction of US oil consumption.

Tar sands and heavy oils, gas-to-liquids and coal-to-liquids are all available to produce substantial amounts of conventional oil substitutes at average costs at or below $60 per barrel. If these technologies were currently in place throughout the US, the world price of oil would not exceed that price, because any attempt by conventional oil suppliers to raise prices beyond that level would immediately be met by additional supply from producers of oil substitutes.

But if these technologies are financially viable at current world oil prices, then why don't they exist in the US? That's because they require massive up-front expenditures to construct the necessary production facilities. These fixed costs, plus the variable costs of production, must be recovered from sales over the lifetime of the project - and future climate policy can substantially increase the variable costs of these technologies.

Climate policy uncertainty impacts of the economic viability of these technologies because of the increased carbon intensity of the gasoline and diesel fuel substitutes they produce. Almost double the greenhouse gas emissions result per unit of useful energy produced and consumed relative to conventional oil. Therefore, if the US decided to set a significant price for carbon dioxide (CO2) emissions at some future date, either through a cap-and-trade mechanism or carbon fee, investors in these technologies would immediately realise a massive loss - because they would have to pay the price fixed for all of the CO2 emissions that result from producing and consuming these oil substitutes.

To understand this point, suppose that a technology exists to convert coal to an oil substitute that is financially viable at an oil price of $60 per barrel and that this technology produces double the CO2 per unit of useful energy relative to oil. At a $90 per barrel oil price, this technology could be unprofitable for a modest price of carbon dioxide (CO2) emissions because of its substantially higher carbon intensity. For instance, at a $100 per ton price of CO2 emissions - which is roughly twice the highest price observed in the European Union's emissions permit trading scheme - the total cost per barrel of oil equivalent, including the cost of the additional emissions, could easily exceed $90 per barrel.

A solution to this investment impasse is a stable, predictable price of carbon into the distant future. Although there is currently a regional cap and trade mechanism for CO2 emissions in the Northeast US, permit prices in the Regional Greenhouse Gas Initiative (RGGI) have been extremely modest - less than $5 per ton of CO2. California also plans to implement a cap-and-trade mechanism in 2012. No significant coal-mining activity takes place in the participating RGGI states or in California. But such regional cap-and-trade programmes are unlikely to set prices for CO2 emissions for a long enough time and with sufficient certainty to encourage investment in facilities to produce conventional oil substitutes. In other words, despite regional experiments with cap-and-trade, it is the national climate policy uncertainty that remains the major factor in preventing these investments.

If prospective investors in the major fossil fuel-producing regions of the US knew the cost of the CO2 emissions associated with these alternative technologies over the lifetime of each alternative fuel project, they would be able to decide which projects are likely to be financially viable at that carbon price. Particularly for coal-to-liquids, much of this investment would take place in the US because of the massive amount of available domestic coal reserves. This investment would also provide much-needed new domestic high-wage jobs.

New sources of supply of conventional oil substitutes would reduce oil prices, create new jobs in the United States and reduce the amount of money sent to governments, whose interests are counter to the US. Finally, this price of carbon would raise much-needed revenues for the US government and stimulate investment in lower carbon energy sources, such as wind, solar and biofuels. A modest, yet stable long-term price of carbon might even stimulate so much investment in conventional oil substitutes and low-carbon energy sources that the long-term net effect of this carbon price could be lower average energy prices across all sources.

The investments in these technologies need not result in higher aggregate CO2 emissions. For example, coal-to-liquids produces a concentrated CO2 emissions stream that is ideally suited to the deployment of carbon capture and sequestration (CCS) technology. Consequently, a carbon price high enough to make CCS financially viable, yet reasonable enough to make this technology competitive with conventional oil, would address both concerns.

If there are concerns that committing to a modest carbon price may be insufficient to address climate concerns, this commitment could be stipulated only for investment projects initiated within a certain time window. The US government could reserve the right to increase this CO2 emissions price for projects initiated after that period. This logic has not escaped the Chinese government, where General Electric and Shenhua, a major Chinese coal producer, recently announced a joint coal gasification project, which is financially viable because the Chinese government can provide the necessary climate policy certainty.

The choice is stark: either we can continue to wait to implement the perfect climate policy, and in the meantime pay higher prices for oil, and watch countries like China that are able to provide climate policy certainty to investors move forward with this new industrial development; or we could commit to a modest climate policy and so unleash the new technologies and new jobs made possible by this more favourable investment environment.

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Today is the last day of the Year of the Tiger in Vietnam. Tomorrow is the Year of the Cat (while in China it is Year of the Rabbit).

There was so much talk about Vietnam being an Asian Tiger in the past. Now, there is a growing concern about the country getting into the "middle-income trap." There is a real risk that the country might turn out to be just a cat and not a tiger.

The Party is aware of that threat and is struggling to find the right path to accelerated prosperity for the people while maintaining political monopoly.

This talk will be from the perspective of a man on the ground and will try to separate the smoke from the fire and find the heat.

Mr. Kien Duk Trung Pham is currently the Chairman of Red Bricks Group, a private investment firm. He is the founder of the Vietnam Foundation and the Vice Chairman of the VietNamNet Media Group, the leading multi-channel media company in Vietnam. Prior to VietNamNet he was the founding executive director of the Vietnam Education Foundation.

In business, Mr. Pham was a market development executive in Fortune 500 companies as well as an entrepreneur in technology and consulting startups. In government, he served in the executive branch under Presidents Reagan and Bush, as well as in the U.S. Senate. He has established nonprofit foundations to assist college students, orphans, and the handicapped in Vietnam. Mr. Pham is publicly recognized for his leadership and management abilities.

Mr. Pham is active in international affairs. In 1986, he was chosen a Young Leader by the American Council on Germany, and in 1992 a U.S.-Japan Leadership Fellow by the Japan Society. In 1993, he was elected as a term-member of the Council on Foreign Relations and a participant in the American Assembly. Mr. Pham was the founder and chairman of the Vietnam Forum Foundation, a U.S. nonprofit organization that provides college scholarships, schools, and orphanage support in Vietnam. He was also a Board member of the Vietnam Assistance for the Handicapped, a leading humanitarian program to help war victims. In 1996, Mr. Pham was a recipient of the "Never Fear, Never Quit" Award.

Mr. Pham grew up in Saigon, Vietnam. In 1977, at the age of 19, he led his family on a high sea escape and came to the United States where they settled in Colorado. Mr. Pham became a factory worker, learned English, and later attended college on scholarship. He received a BS in marketing and international business from the University of Colorado at Boulder, and won a scholarship to study in England. His graduate degrees, earned concurrently at Stanford University, include an MBA in international and organizational management, an MA in international economics, and a special diploma in public policy management. In 1990, Stanford University named Mr. Pham among of the "Most Outstanding Alumni" in the school's 100 years of history. Mr. Pham is former White House Fellow and a recipient an honorary JD degree from Pfeiffer University.

Daniel and Nancy Okimoto Conference Room

Pham Duc Trung Kien Executive Chairman Speaker Red Bricks Group (RBG)
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