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Economic Policy In The 21st Century

Specialist Christopher Culhane, left, works at his post on the floor of the New York Stock Exchange Tuesday, Oct. 4, 2011. (AP Photo/Richard Drew)

"Increasingly, what more and more nations are addressing is how to build economic power at home and how to project economic power abroad."

"Increasingly, what more and more nations are addressing is how to build economic power at home and how to project economic power abroad," said Robert Hormats, State Department Undersecretary for Economic, Energy and Agricultural Affairs.

And as global economic realities shift, our domestic economic decisions affect our position in the global economy, while what we do internationally impacts our own economy, he said.

One trend that has the potential to dramatically change the global economic system is the growth of state-sponsored and state-supported enterprises, which are producing a new model of state-led capitalism, and it is beginning to compete with the open market-driven trading and investment model, which has been the primary driver of innovation and global growth for the last few decades. The challenge is how to respond to this changing landscape and its implications for the way the global economy functions.

We must begin by working together to strengthen the global economy by developing, modernizing and standardizing rules for competition in the 21st century, said Undersecretary Hormats. These include stronger protection for intellectual property for all countries.

We must also ensure a level playing field between private sector companies and state-owned enterprises which we call competitive neutrality.

We must develop and emphasize common interests and develop more opportunities for trans-national partnerships, said Undersecretary Hormats. For example, the United States is pursuing various free trade agreements.

And we must eliminate obstacles such as those faced by the seventeen-year-old North American Free Trade Agreement, or NAFTA, where the impediment to trade isn't so much a question of tariffs as it is a problem of differing standards and regulations. "Together with Mexico and Canada, we are trying to reduce the differences so they do not present major barriers," said Undersecretary Hormats, "It’s an increasingly integrated market, where components in one country go to make final products in another.

"If we can make the supply chains more efficient and reduce barriers such as regulatory and standards barriers, we can have a more seamless and a more competitive North America," he said.

By working together as responsible stakeholders, we can benefit all of our economies.