The Managing Director’s Speech upon Receiving University of National and World Economy Honorary Degree
May 18, 2022
Prime Minister,
Dear Kiril,
Chancellor,
Dear Rumen, [Rumen is one of a handful of fellow students with whom we have shared so much over time]
Dear Lalko,
Fellow Faculty Members, Colleagues, Guests and Friends, including my family gathered here today,
I felt so excited about the wonderful start of the day and am now feeling even more excited, having listened to the speakers before me. I vividly remember the day when I was accepted as a student of political economy and sociology at the then Higher Institute of Economics — today’s University of National and World Economy (UNWE). For me this is the day I embarked on my professional journey in Bulgaria, and later around the globe. Drawing on what the previous speakers have said, I would like to trace and relate my memories of that time to the work I do today in order to share several simple messages with the audience.
The first message is that the UNWE gave me the foundation that would later enable me to find work outside Bulgaria. Mr. Gechev has already spoken about how the perestroika and glasnost came about. All of a sudden, opportunities were there for tutors to apply for scholarships. He chose to go to the United States where he undoubtedly learned a lot and brought this wealth of knowledge back to the UNWE. I went to London. Back in the day, most people who won scholarships in Bulgaria chose the less expensive cities in England because scholarships were so meagre. I remember this because I used to count every penny of each of the 361 pounds I had in my pocket at the beginning of the month. Mr. Berbatov here will tell you how far 361 pounds will stretch in the UK. But when I was given the opportunity to go to the London School of Economics — when I learned that my application had been accepted — there was no hesitation in choosing the LSE — a choice that expanded and solidified the foundation for my future work. That same choice also put me in touch with many members of the academic community, one of whom later become Dean at the South Pacific University in Fiji and invited me to go to there as a visiting professor. The year was 1990. So, what was the first thing that I did? I opened a map to see where Fiji was and realised that the island was literally at the other end of the world. I arrived in Fiji after a journey of more than 48 hours and handed over my passport for inspection at the border. The police officer—a lady—typed something into the computer, turned to me and asked: ‘Where are you from?’. ‘Bulgaria’, I replied. She then typed something again and firmly said: ‘There is no such country’. Times were indeed difficult but that an entire country should disappear from the world map — this was apparently not so difficult. In due time, with a little effort, we eventually did find Bulgaria in the list of countries. It turned out that mine was the first Bulgarian passport ever presented for inspection at the Fijian border.
My lingering memory from this odd moment is the realization that no matter where I am, I represent an entire country — I represent Bulgaria, my loved ones, my friends, acquaintances and strangers alike. And I must always represent them to the best of my ability. As do Mr. Berbatov and Mr. Gechev. As you all do and will do whenever you go to another country.
So, this is my first simple message: always carry Bulgaria in your heart, no matter where you are. Always be proud to be Bulgarian.
You heard from the UNWE Faculty members who spoke before me that my research began with the choice of a topic for my PhD thesis, which, in those days, dealt with matters that were considered—shall we say—peripheral, even exotic. In any case, they were certainly not regarded as a central topic in academic circles. Why did I choose it? I would like to say, as Mr Gechev suggested, that I had the foresight to say that in 30 years’ time the topic would be at the centre of every discussion. The truth, however, is somewhat different. I had a relative at the time who became seriously ill due to water pollution. Had he been better informed, had he known that the environment mattered, he would not have become ill. But the most important reason was this: in those days, PhD candidates in the social sciences were asked to demonstrate the relevance of their chosen topic by supplying quotes from speeches and papers presented at the congresses of the communist party. Something that, as you can easily understand, makes no sense. It should be the congresses quoting science, not the other way around. So, I decided to find a topic that had not been mentioned at any party congress. That topic turned out to the environmental economics.
What conclusion can we draw from this? What is my message to those of you in social sciences? It is this — always base your analysis on facts, on the objective reality, on life. Never succumb to political correctness. Because political correctness often leads to catastrophes of gigantic proportions, and Bulgaria has experienced one such catastrophe.
Another thing that the UNWE has taught me, already as a Faculty member, is to always try to explain complex things as simple as possible so that students can understand them. A skill that proved extremely important at a time when we were writing textbooks together at night so that students could grasp the essence and foundations of the market economy.
I have to admit that the effort I put into learning to explain something that people don’t see in their daily lives — how supply and demand operate, how pricing works, what a monopoly is, what competition means — has helped me enormously in my work for the international organisations. Even the most complex of concepts have to be explained concisely, clearly and simply. Only then can we hope to achieve a measurable impact.
So, this is my third message. The world is becoming increasingly complex, but we must not succumb to presenting it as volatile and unpredictable. We must instead seek a way to navigate the complexity, knowing that we won’t be taking a journey along a perfectly straight one-way street - that there will be turns and hills, and the possibility to turn back.
This brings me to the world in which we are living today. The year 2022 is going to be very difficult because we are heading into a period of one crisis on top of another. Firstly, the pandemic has not yet subsided. China is experiencing enormous difficulties. Economic growth is falling at an alarming rate. This affects not only China, where entire cities have been placed in lockdown, but also the world economy.
We also have war in Europe. Two unthinkable events. Before the pandemic, none of us — despite being aware of the existence of a theoretical risk — really expected that the world economy would grind to a halt and that recovery would take more than two years. Two years ago, on 13 March, we closed the IMF HQ IMF and sent our staff to work from home. My message to my colleagues in those first weeks was that we would work from home for a while. Today, we are still struggling to return to our offices.
Scarier still, there is a war in Europe with dramatic consequences. Firstly, for the Ukrainians and their economy, which will shrink by 40 per cent this year alone. Also, for Russia, which will also be hard hit, with its economy projected to shrink by more than 10 per cent. But the consequences of the war reach much farther — through the prices of raw materials, energy, fertilisers, food. Through the flow of refugees into neighbouring countries and the decline in confidence of businesses should the scenario of the war dragging out or spreading geographically become a reality.
What lessons can we learn from these crises? The first and obvious one is that we are interdependent. War in Ukraine means a recession in countries that are large importers of energy products or food. War in Ukraine means famine in Africa. We cannot overcome these challenges unless we work together. We cannot address the situation unless we think about the world as a whole. The second lesson is that we depend on nature. A tiny virus spread around the world and brought us to our knees. This clearly shows us how much we depend on nature when a disaster strikes, bringing entire countries and regions to a standstill.
We have also learned—and this is a very important lesson for academic institutions teaching economy—that we are ill prepared to deal with more than one crisis on our hands. Remember what happened when the war broke out — Covid disappeared. For twenty days nobody even mentioned Covid. Never mind that China went into lockdown.
These are important takeaways, but perhaps the most important of all is that we live in a world that is changing at a much faster pace — that is much more dynamic and much more prone to shocks. We must get used to the fact that other shocks are coming. We must be able to envision the unthinkable and prepare to meet it head-on.
How can we do this? The single most important thing we heard from previous speakers is to value people as the most important asset. We need people who are resilient to shocks — people who are well educated, in good health and able to rely on a strong safety net so that when a shock hits, they can remain on their feet. This applies equally to households and businesses.
Secondly, we need to work tirelessly for the sustainability of our planet. And this takes me back to my PhD thesis, which is now 30 years old. We cannot afford to turn a blind eye to the existential risk posed by climate change. We must adjust our economies and our way of life to mitigate the risk and prepare for it so that we are able to cope with disasters when they strike.
And the third conclusion that leaps to the eye is - sustainable economy. But not in the narrow sense of the concept that we embraced after the global financial crisis and acted to tighten up the banking system. The action we took undoubtedly helped us deal with the crisis then. It was necessary but it is far from sufficient.
A sustainable economy implies three things. The first one takes us back to Adam Smith and his ‘recipe’ for a poor country to become rich. Peace — no country will do well without it; affordable taxes, Prime Minister (addressee Bulgarian Prime Minister Petkov, who is in the audience); and a well-functioning judiciary system. No one has come up with a better formula for wealth accumulation since the days of Adam Smith.
Secondly, we must clearly realise that earth’s population was much smaller in Adam Smith’s Day. There are now 8 billion people living on our planet. We need empathy for each other — where we live, but also for people in faraway places and much more difficult circumstances. We must think and act with kindness to others. I would like to thank both Mr. Berbatov and Mr. Stoichkov because when I was Commissioner for Humanitarian Aid, they were great champions of the cause of ending hunger and poverty in the world. I will say this in brackets: it makes me so proud, as a Bulgarian, to see fellow Bulgarians as symbols of humanity and inclusiveness, using their much-deserved fame for good causes.
This feeling of belonging to groups and communities in a world that is increasingly encapsulated in the virtual space is precious and we need to nurture it. The opposite would mean becoming even more alienated instead of more tightly connected to others.
The third ingredient of a sustainable economy is greater flexibility in economic policy — having the ability to steer an economy where it needs to go and anticipate that which lies ahead.
Allow me, as a final point, to touch on another matter that has become a reality: digital money. The world needs to prepare because digital money is a one-way street. Increasingly, along with the paper money [that Mr. Radev, Bulgarian National Bank Governor prints], alternatives will develop, such as central banks issuing digital currencies, private individuals issuing so-called stablecoins, bitcoin among them. Koto, despite the claims of many, is not actual money. It really isn’t. Why? Just look at the value of bitcoin — it goes up, down. It never stops fluctuating. And when we have money, we want to know that money holds value and that we can count on it to purchase something with equivalent value.
This is one of the big challenges to address. The alternative is to live in a world of unregulated digital money. We saw what happened several days ago with the collapse of some of the so-called stable coins that turned out to be somewhat less than stable. These developments aside, there are clear signs that the main driving force for change in the world today is digitalisation, that data and information are the most valuable commodity, and that as politicians we have not yet mastered it, and we need to.
Let me conclude with a piece of advice for the young people gathered here today: ‘Learn from everyone, everywhere’. I won't admit how old I am, but I assure you I’m old enough to have a grown granddaughter. I talk to her like any good grandmother about what life was like when I was her age. I once told her that back in those days we had no television, no computers. And she looked up at me and said: „So you only had iPads?”. The world is undoubtedly changing at a much faster pace today compared to my youth.
On a final note, I would like to thank everybody, especially my family and my daughter who put up with a mother whose work took her to all corners of the world. Thank you!