Issue 126 (July-September) of the IESE Alumni Magazine is now available. The cover story, "Facing Up to Change," reviews key reforms put in place in Spain and on an international level with input from IESE professors. The article also examines how the measures are impacting the day-to-day activities of companies.
The economic crash of 2008 exposed the wishful thinking behind the project of the European single currency and has revealed the painful truth that sharing the same banknotes doesn’t make us all equal. The stronger members are demanding painful, if often necessary, reforms of its weaker partners in return for financial rescue packages that are costly for all concerned. In this article, IESE professors review the recent changes taking place in Europe and their impact on business. The transition won’t be easy, they say, but they believe it will help the European Union emerge from the crisis with a stronger economy and society.
Areform is a change in the rules of the game that changes a country’s economic strategy. It’s not a good idea to change the rules too often, but sometimes it’s necessary to get rid of accumulated problems and to orient the country to cope with the new conditions in the international economy, says Prof. Antonio Argandoña. He adds that the economic recovery depends on us. “It’s time for reforms,” he says. That said, there needs to be a plan, because the problems of the European economy are not just a result of the juxtaposition of independent problems, says Prof. Juan J. Toribio, but because these problems are interrelated and it is therefore necessary to draw up a plan based on a long-term solution and a global vision because there will be no immediate improvement. He emphasizes that “things cannot be fixed with partial measures, disconnected or separated over time or subject to political horse trading.”
Argandoña points to the so-called German model as a possible remedy for Europe’s woes. Although based on theories developed in the 1940s and 1950s, it comprises a series of coherent ideas that are broadly accepted by the majority of citizens, politicians, experts, businesses and trade unions.
Germany is an open economy based on exports, not consumerism. Exports also serve as the motor for innovation and the development of other sectors and is itself based on quality and advanced technologies, not on low-cost products. High productivity contributes to low inflation and a high standard of living.