Welcome to the Official page of the Presidency of the Portuguese Republic

Honourable Minister of Commerce and Industry of India,
Honourable Chief Minister of Karnataka,
Mister President of the Confederation of Indian Industry,
Distinguished authorities and guests,
Ladies and gentlemen,

It is a great honor for me to address the 13th Partnership Summit, which returns again to the now world famous city of Bangalore.

I find it very revealing and illuminating that you have chosen “Emergent India: New Roles and Responsibilities,” as the central topic for your annual event.

A few years ago, India could be perceived as a rural country, with widespread scarcity and in need of development assistance. Today India is recognized as a success story, where millions of people have been lifted out of poverty, through the efforts of India national and state governments, as well as the efforts of its increasingly assertive companies.

Today we regard India as a place where the future is being shaped: a land of bright people, of new technologies, research, innovation and cutting-edge industries.

It is this India that I would like to get interested in a closer cooperation with Portugal.

India is, of course, a land of contrasts and diversity. Still, the idea that emerges when we now think of India is one of hope and success.

Much of the amazing growth that we are witnessing today in the global economy comes from emerging markets and developing countries.

From 1997 to 2006, average yearly growth in developing countries has reached a rate of almost 6 per cent, against 4 per cent in the global economy; and according to the World Bank the share of developing countries in global output will rise from 20 per cent today to around 33 per cent in 2030.

India, in particular, is a major engine of the world economy. Apart from China, India is the only country that has kept a sustained high rate of growth since 1980.

Over the last decade, the Indian economy has grown at an annual rate of around 7 per cent, contributing significantly to the growth of global output. Foreign Direct Investment in India has increased substantially in recent years. Very soon, if not already, India will become the third largest economy in the world, measured in PPP (purchasing power parity) terms.

Also, in the next 30 years, India will likely overtake China as the world’s most populous country, with a young population that will certainly be another driver of progress.

There can be no doubts about the already huge importance of the Indian economy in the global context.

I am sure that this Summit and its global visibility and relevance are also a tribute to the success of India’s corporations. Exports from India have more than doubled its weight in the Indian economy; at least three Indian technological companies are already in the top 250 in the world, and services export growth in India has reached a cumulative rate of more than 700 per cent between 1994 and 2003, the highest in the world.

Moreover, an increasing amount of Foreign Direct Investment occurring in the world today comes from companies based in India, China and Brazil.

This is a remarkable change in the traditional economic relations among countries. Also, the Financial Times “Man of the Year” award, in 2006, to Lakshmi Mittal, clearly illustrates this.

It is my belief that the world has not yet fully captured the significance of these changes.

In Europe and the US, the emergence of Indian companies as investors or acquirers is still viewed with a mixture of surprise and suspicion.

So this notion that India - as the theme of this Summit suggests - needs to understand the scope of its new roles and responsibilities is very appropriate.

Since I am an economics professor myself and I have had the privilege of serving my country as both prime minister for 10 years and now as President, you may find it useful that I share with you some of my experiences and views on the current trends of the world, and in particular on the ever-present issue of globalisation.

Globalisation has brought us very positive things. But it has also raised some issues that if they are not dealt with properly can undermine this extraordinary movement.

On the positive side we can list some important benefits of globalisation such as an improvement in the global allocation of resources due to the international specialization of labor; an increasing mobility of people, ideas, capital and goods; reduced political, cultural and commercial barriers; fast dissemination of best practices in all areas of life: business, health and education; and an increased access to knowledge, technology and goods.

The positive impact that, on average, globalisation has had on the living standards of people is overwhelming, especially in developing countries that have embraced the globalisation process.

Per capita income in developing countries increased by a yearly average of 2.1 per cent between 1980 and 2005 and, according to the World Bank’s latest report on the “Global Economic Perspectives”, it is estimated to increase at an even faster pace, 3.1 per cent, until 2030.

Development economists have shown beyond controversy that large proportions of the world population have been lifted out of poverty. And although, so far, this result is due essentially to the economic successes of India and China, the World Bank expects that until 2030 the number of people living in dire poverty (with less than one dollar a day) will be cut by half, from 1.1 billion today to 550 million.

Health conditions have also substantially improved throughout the world, thanks to the spread of preventive medicine. Infant mortality is declining almost everywhere and pre-natal care is now provided to many expecting mothers.

It is safe to say that when we measure results in terms of the sheer number of people that have seen improvements in their living standards, economic integration and global markets have been more successful than any alternative approaches.

We should not underestimate the power of globalisation to deliver positive results for the underprivileged.

It is no wonder that we now see many countries in the developing world asking for further market openness. This is a clear shift in the position regarding trade policies and the benefits of globalisation. It is also, I believe, part of a virtuous cycle that is likely to persist as demand for higher-quality education and goods increases, and gains from a stable investment climate and an active participation in the global market become clearer to everyone.

This, of course, is not to ignore that many people suffered a decline in their living standards in this process. The lifting of output per capita in many countries does not necessarily mean that each and everyone has benefited from globalisation.

But since global output is increasing, we should be able to design policies, both at the national and global levels, aimed at distributing more fairly the benefits from the integration of national economies. This is an area where we still have a long way to go and in which the countries affected should have an effective voice. Governments should have an additional incentive to reduce bureaucracy and an interest to improve transparency in Public Administration.

Many businessmen, such as yourselves, are true believers in the forces of globalisation. So you may agree with most of what I said about it. But you may also ask yourselves: Why is there some discourse against globalisation or against the multinationals and businesses that benefit from it?

More room tends to be dedicated to criticizing globalisation than to explaining the benefits that this process has brought to so many people. But some of the issues raised are real issues. Let me share with you some of the challenges posed by globalisation to suggest that policies can be put in place to appropriately deal with them.

If we do not do so, we risk social unrest and even a backlash, in the form of protectionist policies. It would be unfortunate if the current intensity in international trade and dialogue were to be replaced by more isolationist approaches to development and growth.

Most of the issues posed by globalisation can be seen as challenges for political leaders around the world to improve the quality of their domestic policies. Others may need to be managed at a global scale, particularly through increased coordination among national governments. This can be the case with environmental problems or financial instability.

I believe that efficiency and equity goals can be jointly pursued. In fact, they are often mutually reinforcing. It is a tribute to the value of human life to believe that everyone can make great contributions in our society. But to do so, everyone needs to have access to equal opportunities.

Economic policies should incorporate the poor in the growth process, through measures that improve education, training, health and infrastructures.

The fast dissemination of information and knowledge in the last few decades has revealed that many people in poor or rural areas may be easily left behind. It is the obligation of the leaders of our society - political, business or cultural leaders - to spread values and practices that create incentives to the participation of everybody in the process of learning.

On the other hand, political leaders should help prepare their fellow citizens and business leaders for the changes that a more integrated world is constantly bringing about.

I have sponsored the creation of a Globalisation Council in Portugal, which first met last November, not just with the goal of attracting interest of global players to Portugal but mainly to provide a forum in which their perspectives can be shared with Portuguese companies and society at large.

With the right approaches, governments and businesses will be able to demonstrate to the rest of society the benefits of a more integrated world economy.

To conclude, let me take this opportunity to talk about Portugal and the European Union.

The European Union is a unique example of economical and political integration. Its member states have set up common institutions to which they have delegated part of their sovereignty so that decisions on specific matters of joint interest can be made at European level.

The European Union, which currently embraces 27 member countries and about 500 million people, is the largest economy in the world. Although with just 7 per cent of the world population, the European Union accounts for a fifth of global imports and exports, being a major trade partner to all the regions of the world.

Since it was launched in 1999, the Euro, the single European currency to 13 countries, has become the second most important international currency, behind the US dollar.

European Union is now an economy where there is a single market, where goods, services, capital and labour are totally free to move.

Europe is fully committed to sustainable development and to fight exclusion and poverty around the globe.

Portugal is a modern economy, fully integrated in the European Union, sharing the Euro currency with other European countries.

Our economy encompasses a wide range of industrial and service businesses, while agriculture employs nowadays only a small proportion of the workforce.

Many of our leading companies in different economic sectors, some of them present here with me, operate internationally, and intend to expand to India.

Some of our traditional products keep a strong position in the export world market, but our economy has become much more diverse and certainly more modern. We have a recent generation of enterprises in new technology industries. Some of them are developing products and services for niches in the global marketplace: in information technology, in biotechnology, in mobile gaming or software applications.

Portugal may be viewed also as a meeting place, a gateway to different worlds: Europe, Asia, Africa - where Angola and Mozambique speak Portuguese and have strong political, economic and cultural links to Portugal -, and America, where our strong cultural and business links with Brazil are particularly significant.

My main message for you today is that further integration with the global economy can be beneficial for us all. I brought with me many significant Portuguese companies and I encourage you to look for ways of cooperating with them profitably.

Bangalore is now studied as a region that has leaped to the frontier of knowledge. The eyes of the world are set on this region.

I am delighted to be here and strongly impressed by the exciting business atmosphere that you have here now.

I hope you continue to prosper in the future and that you strengthen your links with Europe and Portugal.