Creating Economic Opportunity
APEC charts path toward equitable growth as an ‘incubator of new ideas’
By Judy Lam | Global Gateway Advisors
As San Francisco fast becomes the epicenter for artificial intelligence development, the city is a natural fit for APEC’s return to the United States for the first time since 2011.
San Francisco is home to 20 of the 50 companies on the Forbes AI 50 list and is already living what many call the new tech boom. This has set the stage for government and business leaders to discuss how to harness emerging technologies, and use them to make supply chains more resilient, help mitigate climate change, and upskill talent in an inclusive way to create economic opportunities in all corners of the Asia-Pacific region.
Much has changed for APEC in the last 12 years. The region’s population has increased 9.3 percent to 2.95 billion in 2021, from 2.7 billion in 2010. Meanwhile, GDP soared 50 percent to $52.8 trillion USD, representing 62 percent of total global GDP.
But the Covid-19 pandemic and its devastating effect on supply chains around the world — alongside recent geopolitical conflicts that highlighted the urgency for faster energy transition — have accelerated the region’s transformation in an unprecedented way. Among APEC’s top priorities is to ensure no one is left behind, underscoring the importance of knowledge exchange between member economies and the need for clear, coordinated regulatory frameworks.
“With APEC members accounting for almost half of global trade, and more than 62 percent of U.S. goods exports, it is a critical forum for promoting everything from common standards and protocols, to measures to enhance climate resilience and relationships in the region,” said Monica Whaley, president of the National Center for APEC.
This year’s CEO Summit theme, “Creating Economic Opportunity,” represents the shared goal of the 21 APEC member economies focused on four pillars: sustainability, inclusion, innovation, and resilience.
“During the U.S. host year, we really drive the agenda,” Whaley said. “Our ambition for the CEO Summit is to unite the public and private sectors for a dialogue that gets us closer to real solutions in each of these four areas.”
The northern hemisphere has just emerged from a brutal summer, and nearly all of the world’s population experienced higher temperatures from June to August 2023 as a result of human-induced climate change, according to peer-reviewed research by Climate Central. Prolonged heat waves caused catastrophic wildfires and spikes in mortality rates. A study in the weekly publication Nature revealed that extreme weather events attributed to climate change cause $143 billion USD in costs worldwide each year.
AN ENERGY TRANSITION THAT EMPOWERS GROWTH
The urgency to tackle climate change must be balanced with the ongoing needs for affordable energy to achieve equitable growth in the APEC region, according to Darren W. Woods, chairman and CEO of ExxonMobil.
Given APEC’s scale, “there are few places in the world with greater need for reliable, affordable supplies of energy and essential products,” Woods said. “The goal, however, is to help grow these economies and improve billions of lives while doing all that we can to reduce emissions and address climate change. The APEC CEO Summit provides a unique opportunity for leaders to discuss how we can meet the two challenges of building prosperity and accelerating a thoughtful path to net zero.”
It is vital that companies across sectors strive for similar goals. General Motors is rapidly scaling up production to meet its goal of producing 1 million electric vehicles in North America by 2025.
The company “has long supported a positive trade relationship between the U.S. and the Asia- Pacific region,” as well as “efforts toward creating sustainable trade policies,” said GM’s chair and CEO Mary Barra, who is also co-chair of the CEO Summit.
APEC advocates for the removal of structural barriers that prevent people from accessing economic opportunities — and the expansion of healthcare, education, and financing so everyone can develop their own capabilities.
INCLUSION IS KEY TO PROSPERITY
Small and medium enterprises (SMEs) and women- owned businesses are the engines of growth in the region, accounting for 97 percent of all businesses and employing more than half of the workforce. While SMEs contribute up to 60 percent in GDP for most APEC economies, they account for 35 percent or less of direct exports. APEC aims to reduce barriers to trade and make it easier for SMEs and women- owned businesses to access foreign markets.
“Resilience is not going to be achieved without the small and medium enterprises leading the way,” said Mike Pyle, U.S. Deputy National Security Advisor and the 2023 Chair of APEC Senior Officials, as he welcomed leaders to Seattle in August.
Inclusion is about enabling everyone to participate in economic growth, regardless of family income, gender, race, or location. APEC advocates for the removal of structural barriers that prevent people from accessing economic opportunities, and the expansion of healthcare, education, and financing so that everyone can develop their own capabilities.
For Albert Bourla, chairman and CEO of Pfizer, the commitment to inclusion was instrumental to emerging from the pandemic.
“If the last few years have taught us anything, it’s that if we work together, there is no challenge that we cannot overcome,” Bourla said. “That is why APEC is so important. APEC brings together some of our world’s best and brightest minds, from across government, industry, academia, and civil society to tackle our most daunting challenges.”
Organizations are still reckoning with the global supply chain challenges that unfolded during the pandemic. Many have adopted a “just-in-case” inventory management of overstocking — a reversal of the leaner, pre-pandemic, “just-in-time” approach. This strategy has resulted in soaring inventories at a time when consumer spending is volatile, as rising inflation squeezes buying power.
On top of precarious inventory control, the growing threats of extreme weather events and geopolitical tensions have compounded the challenges for Asia-Pacific leaders.
Building resiliency goes beyond simply managing supply chain risks; it must also encompass public health threats, disaster readiness, and dynamic international relations.
Recent events struck a chord for Pyle. “We’ve seen the news out of Hawaii … and the work obviously of the disaster management officials and the ongoing importance and essentialness of that work, I think, was brought home,” he said during the August meeting in Seattle.
EVOLVING SUPPLY CHAINS
FedEx, a major player in the logistics network space, believes continual innovation is vital.
“If we have learned anything from the past few years, it is that global supply chains cannot be taken for granted,” CEO Raj Subramaniam said. “The unparalleled FedEx logistics network keeps the global economy moving, and we are looking at ways to use data as we build smarter supply chains for our customers and the world.”
Innovation isn’t limited to AI, though it is arguably the most significant technological breakthrough since the Internet. One year after the momentous launch of ChatGPT, it is due time to examine the path forward on how best to deploy this powerful technology responsibly.
To that end, closing gaps in digital skills through incentives, literacy training, and certification programs are crucial for ensuring the readiness of the APEC region’s workforce, said Stephanie Bell, a senior research scientist with Partnership on AI, at APEC’s digital trade policy dialogue in August. Bell stressed that while the responsible use of AI could unleash enormous productivity gains, without proper governance, AI could hurt economies that have invested heavily in industries or occupations that are on the verge of automation.
“New technology has the potential to help and harm,” said Mastercard CEO Michael Miebach. “The public and private sectors need to collaborate and make sure it’s used to benefit people first. APEC is a great forum to discuss how we can do that and take action.”
Innovation cuts across the other three CEO Summit pillars, too. For example, AI can minimize supply chain risks by using predictive analytics and response systems to better prepare for and respond to natural disasters. Supply chain management can also be improved, with the potential to achieve up to a 20 percent reduction in inventory carrying costs and a 50 percent decrease in stockouts, according to McKinsey. Technology can also devise ways to tackle climate change, by optimizing energy consumption and managing natural resources more efficiently.
Inclusion is the one focus area that could suffer due to the concentration of resources and knowledge, and the inaccessibility of technology and education in some regions. However, APEC can play a crucial role in leveling the playing field — specifically, by fostering cross-border research collaboration and laying the groundwork for a high-level regulatory framework via consensus among participating economies.
To Alfred F. Kelly, Jr., Visa’s executive chairman, inclusion is the only path toward digital equity.
“We believe that we will only achieve digital equity in the world when individuals and businesses have the opportunities, the skills, and the trust to fully participate in the digital economy together,” he said.
The digital economy opens doors for businesses large and small to reach global consumers. As technological systems improve with every iteration, so too must APEC adapt and evolve.
“There is a history of APEC being an incubator of new ideas, generating new ways of approaching the problems that the world — and the region — confront,” Pyle said. “And there is no moment where the need for innovative economic thinking is more important than this one.”
