Page 58 - Accelerating out of the Great Recession

THE NEW REALITIES

Prime Minister Margaret Thatcher in the United Kingdom—
toward liberalization, deregulation, and privatization as govern-
ments pushed back the boundaries of the state. This trend
gained momentum after the breakup of the Communist bloc in
1989 and the subsequent moves toward more openness in inter-
national trade that came to be called globalization. One of the
main areas of deregulation was in the financial sector, and it was
such deregulation that laid the foundation for some of the
excesses that have been witnessed in recent times.
However, the process of deregulation and liberalization has
halted abruptly. Indeed, it is now clearly going into reverse—a
move strongly signaled by the G-20 nations in their 2009 meet-
ings. The financial crisis is forcing governments to become alto-
gether more active and more interventionist. This expectation
of more interventionist governments is shared by 75 percent of
the corporations we surveyed in the second of our 2009 surveys.
The increase in government activism is driven by a number
of factors:

• The desire to continue supporting economies around the
world through spending and an expansive monetary policy.
• The aim to reduce a dependency on imports through the
“reindustrialization” of the economy.
• The wish to protect domestic financial and business inter-
ests from acquisitive foreign corporations.
• The requirement to take ownership of major companies—
particularly banks but also failing businesses such as the
U.S. automotive companies.
• The pressure to take steps to prevent another global eco-
nomic crisis through the introduction of new regulations.

■ 37 ■