00:00The world seems to have changed, and this is partly because of the war with Iran.
00:03This is also trade tariffs and the fragmentation almost of everything.
00:07How do you see economics changing because of that?
00:12I think it's true that we are beyond the full globalization phase.
00:20In the 1990s, we were all into the end of history and full globalization,
00:27value chains built on cost minimization.
00:30We would have each step of the value chain would be performed by the country
00:35where the productivity is maximal or cost minimized.
00:42It was really cost minimization was the driving force of value chains.
00:47Nowadays, resilience is becoming much more a driving force of value chain.
00:51You want to make sure that you deal with countries that will not turn their back on you.
00:56And that you have supply assurance becomes a big consideration to bear in mind
01:04when you build up value chains.
01:07So you are very much into Mark Carney's speech in Davos.
01:11He tells you exactly what to do.
01:14Countries that believe they share some values, you know, democracy, rule of law, need to get together.
01:23And also, you have to make sure you deal with countries.
01:26I mean, some of them, they have terra, they have, you know, the scarce land.
01:31Others, they have different type of technologies.
01:34But they share the same values and they should get together because they know they can rely on each other
01:40on the long term.
01:42Your Nobel Prize, and congratulations for that, it was only in 2020, fine, was basically creative destruction.
01:48The idea that because of technology and things like that, things will be, you know, because of technology, things will
01:54change.
01:54How does this extra layer of uncertainty do with how you look at economics longer term?
02:00But, you know, uncertainty is never a good thing when you are into innovation.
02:04I mean, innovation is by nature uncertain, but you don't want to have extra uncertainty.
02:09So any extra source of uncertainty is not, you know, conducive to innovation.
02:15Innovators need to think long term.
02:17You see what I mean?
02:18I think they need a stable environment.
02:20We need fiscal uncertainty.
02:22You know, certainty.
02:24We need stability.
02:25You know what I mean?
02:26Instability is not conducive to long term innovation.
02:30You need, but, you know, we have to do with what we have.
02:34And still, there is some globalization.
02:37It's not the same as before.
02:39I think there is one good aspect to this, is that Europe now realizes it has to innovate more.
02:46I think Europe has been the kind of sleeping beauty over the past 30, 40 years.
02:51You see, they thought they could rely on the U.S., on others, and not, you know, invest heavily in
02:58breakthrough high-tech innovation.
03:00And now the Europeans, and defense, and now the Europeans realize, I hope, that they need to rely on themselves
03:06more than in the past.
03:07And they need to, you know, to reverse this technological decline they've been experiencing.
03:16But with oil prices up $20, $30, with LNG prices up 20, 30 percent, does that completely change the way
03:23that you see innovation and technology?
03:25Because people will be distracted or will be dealing with the crisis at hand.
03:29You see, I think the Hormuz, to have the blockage of Hormuz is not great, and to have the rise
03:36in oil price is not a great thing.
03:40I don't think it will lead to disaster.
03:42I think what it will lead to is a kind of slight increase in inflation by maybe 0.4 percent,
03:51whatever, and a slight growth slowdown, but not dramatic.
03:57So it's not, of course, we could, I'd better not have the rise in oil price.
04:03But I don't think it will have, I don't see dramatic effects, you know.
04:09It's not that it will precipitate us in another global financial crisis in the next month.
04:14I don't see that.
04:15I see a limited slowdown and a limited rise in inflation.
04:19I mean, given the models for which you won, of course, a Nobel Prize, where do you see Europe on
04:24the technological phase?
04:26The thing is that Europe is stuck in midterm incremental innovation.
04:31It's not doing enough breakthrough high-tech innovation.
04:35We don't have the, and why is that?
04:37That's the Draghi report, the LETA report.
04:39We don't have a true single market for goods and services.
04:42We don't have an integrated capital market.
04:44We don't have enough long-term funding of research, you know, to do breakthrough innovation.
04:49You need to fail.
04:50You need to be able to fail.
04:51To be able to, you need to risk-taking.
04:54And long-term research finance is important to, if you want researchers to take risk.
05:00We need more venture capital to have startups take risk.
05:03And we need more institutional investors.
05:05We don't have enough of those.
05:06That's the ecosystem that we need to put in place in Europe.
05:10I hope.
Comments