The theme of the 24th Symposium is: “Global Arbitrage – Evaluating Opportunities and Risks”. The theme was selected to provide a contemporary and multilayered basis for meaningful discussion, while also being socially and culturally relevant given the wide spectrum of professionals that will be present at the conference.
Global Arbitrage may seem to be an unsuitable theme in the globalized world we live in today, in which trade barriers are quickly disappearing and the world’s economies are becoming more unified and equal. However, the social, cultural and economic disparities that have recently come to light have not only existed since the financial and economic crisis. These issues are becoming increasingly visible throughout Europe and the rest of the world, creating a massive challenge for individual states, societies and their respective economies to overcome these newly reopened rifts.
Arbitrage plays a crucial role as it creates transparency by exposing disparities in the economic system and thereby facilitates the correction of systematic imbalances. However, it also leads to an increased concentration and specialization in individual highly competitive industries. Given both these factors and the increasingly volatile markets and scarcity of resources, arbitrage will lead to higher interdependencies amongst industries and countries. This begs the question whether arbitrage in reality and in the long run will lead to an improvement in economic conditions and sustainable economic growth. The core areas participants may focus on are: energy, culture and regulation.
The European market’s competitiveness is at risk as it may fall behind in the race for securing crucial fossil fuel supplies necessary for high density economic activity. North America and most BRIC nations are able to secure their energy supplies through national reserves and geo-politics. However, Europe is increasingly dependent on external energy especially from Russia. In Germany this presents a particularly problematic issue as it is essential for medium-sized businesses to receive natural resources at reasonable prices to remain competitive. Arbitrage is able to guarantee that these companies are able to maintain themselves as they are able to access economically fair priced resources from other markets. This reinforces the importance of stable and competitive resource prices for the German and European economy. Arbitrage creates an opportunity for companies to use the system to their benefit and gives them the possibility to monetarily outweigh this competitive disadvantage.
Furthermore, cultural arbitrage rises as an essential factor as the convergence of global economies leads to the creation of intercultural business exchange. A modern day example would be that an increasing number of students seek education abroad especially in the United States leading to the students learning about another culture and directly engaging in biculturalism. Cultural arbitrage is not nearly as obvious as economic arbitrage, however plays an increasingly important role as more developing countries relevant in global trade seek to take advantage and exploit the resources of other countries to either benefit such as the excellent university education system in the United States. This potential may ultimately lead to a need for adaption and will probably ease the impact of locally established cultural conventions.
The globalized economy reduces the importance of regional differences and stakeholders therefore face the challenge to properly coordinate their international activities and achieve maximal efficacy. This raises the question if local regulation can provide the necessary framework and regulatory power to enforce the rule of law in an ever more globalized economy. Economic stakeholders also use regulatory arbitrage to their advantage and use various legislative environments to avoid large taxation and strongly regulated markets. This fundamentally may lead to a competition amongst countries to create the most economically efficient and attractive regulation to secure global companies. The global economic framework needs to tackle the problem of ‘regulatory arbitrage’ and must standardize economic and business legislation to make the global economy more efficient, in the sense that less competitive environments will be forced to adjust their policies or move the process of policy-making to a global instance altogether.
Guiding Questions that should be addressed:
- Does Europe risk its competitiveness through inefficient economic policy and regulation?
- Does Arbitrage lead to sustainable economic growth and to changes in the affected countries / regions?
- Does Arbitrage actually cause the alignment of economic growth in different regions or areas?
- Do we live in a world where decisions are made in the short term and does this affect the growth of innovation by stifling the creativity of innovators?
- Does Arbitrage inhibit innovation by shifting resources to short-term activities?
We are much looking forward to your answers in lectures, discussions, and educational workshops that will take place at the 24th EBS Symposium (September 18th to 20th 2013) in the unique location and atmosphere of Schloss Reichartshausen in the Rheingau.