Governor & Professor-in-Practice
London School of Economics
Lutfey Siddiqi is a Governor at the London School of Economics and an Adjunct Professor at the Risk Management Institute, National University of Singapore. He is also a member of the Global Agenda Council (Financing) at the World Economic Forum and a former board member of CFA Singapore.
Previously, he served as the Managing Director and member of the Global Executive Committee of FX, Rates & Credit (FRC) at UBS Investment Bank with responsibility for emerging markets. He was also a member of the UBS Group Sustainability Council, the investment bank innovation board and the cross-divisional panel of opinion leaders.
Lutfey obtained his First Class BSc. (hon) in Econometrics from the University of York, MSc. (Econ) from the London School of Economics and the International Baccalaureate diploma from UWC Atlantic College. He was honored as a Young Global Leader by the World Economic Forum in 2012 and was invited to speak on the official program at Davos consecutively between 2013 and 2016.
You recently mentioned that promising rate of Globalization is now being challenged. What factors would you say are contributing to this global deceleration of progress?
Firstly, it is a reaction to at least two decades of hyper-globalization that was characterized by increased trade, cross-border investments, efficiency in production processes and convergence of standards. While this has been unambiguously positive in an aggregate sense – by lifting hundreds of millions of people from poverty into the middle class or by dramatically raising health outcomes in developing countries – it has also resulted in significant dislocation and disparities, especially in the western world. Not enough attention was paid to those adversely affected by globalization.
Secondly, we are on the cusp of a “fourth industrial revolution” that threatens to dislocate business models, supply chains, and employment practices even further. A combination of extreme automation and extreme connectivity together with 3-D printing, artificial intelligence and so on will impact livelihoods in uncertain ways. Jobs that were previously off-shored to emerging economies could now be re-shored back to the west as technology makes them cost-effective.
There are other factors – such as the slower growth of import demand from China which has been the principal purchaser of primary commodities for several years – but the two forces of political backlash and technology revolution are the determining ones.
“There is no question that the reality of globalization needs to be more inclusive. However, our leaders need to help separate fact from fiction.”
How can we regain this global momentum?
There is a problem of reality and there is a problem of communication. There is no question that the reality of globalization needs to be more inclusive. However, our leaders need to help separate fact from fiction. While the political narrative in the recent US elections has focused on “China stealing our jobs”, the fact is, far more jobs were lost to technology. Failure to diagnose the issue and lead an appropriate skills & social innovation response will continue to feed the forces of protectionism. Elements of the fourth industrial revolution – for example, the ‘Uberisation’ of several industries – will challenge some functions of government. We will need alternative modes of income redistribution, monetary policy, and infrastructure provision. So the first need of the hour is more responsible and responsive leadership.
At a people-to-people level, we need to continue to engage across boundaries, seek out diversity, seek to understand the views of those outside our echo-chambers, learn to engage in constructive conflict, learn to separate fake news from real ones and through raising awareness at the grassroots level, become less politically exploitable. This is not necessarily in the domain of finance and economics but it has a direct bearing on attitude towards global trade and capital.
How do you think the appointment of Donald Trump as the President of the United States will affect the country’s relationship with developing nations like Bangladesh?
Generally speaking, the budget for overseas aid in most western countries will be curtailed or constrained going forward. I’m proud of the fact that the UK is still committed to spending 0.7% of its income on overseas aid – one of a very small number of countries with the political courage to do so across party lines – but this will continue to be challenged. Beyond aid, trade might be affected if the Trump administration follows through on some of its protectionist rhetoric. Thirdly, if the US wishes to pull back in a geopolitical sense, countries like Bangladesh will have to court China and others in an increasingly multi-polar world order.
With all this uncertainty on the global stage, how should economies like Bangladesh move forward to reach their growth objectives?
Bangladesh needs to raise its rate of growth and diversify its sources of growth. “Demographic dividend” sounds like a cliche but it is a huge comparative advantage to have a median age of 26 years as opposed to 40+ in developed countries. What matters for growth is productivity – how much value do we produce every hour and how much more value can we produce in that hour, next year. For this we need infrastructure. It is encouraging to see so much progress already in roads and highways, extremely high coverage of digital connectivity, electricity supply, planned expansion of airports, plans for urban transport, etc. What we also need is ‘soft infrastructure’. This ranges from the quality of our education and skills training, standards of professionalism in the public and private sector, competitiveness, and predictability of approval processes and efficiency of our finance sector.
Bangladesh has a vibrant social enterprise sector. Even a promising start-up sector. It is known for cost-effective innovation and resilience. In the business world, it is moving beyond standardized T-shirts to producing exclusive items for designer brands. There’s tremendous promise.
What are your views on the recent positive developments that Bangladesh has had with China and the World Bank?
International diplomacy is as much about courtship and relationship management as it is about protecting national interests. It is good to see positive, professional relationships grow with multiple major powers and multilateral sources of capital. Bangladesh commands respect for its tremendous achievements. On rare occasions, it also receives constructive criticism from well-meaning friends. We should engage and derive determination from both.
You’ve worked in the Banking Sector as a Managing Director of Barclays Capital and UBS Investment Bank. However, now you’re an Adjunct Professor at the National University of Singapore and a Governor and Visiting Professor-in-Practice at the London School of Economics. How did you make this shift in the profession?
It’s perhaps a hallmark of our times that we will have multiple professions in our careers! I used to look after the emerging markets business for bonds and currencies globally, reporting directly to the highest governing body of the investment bank. It is an intense, high-energy, fast-paced profession and in recent years, the job was as much about business model transformation as it was about helping clients with investments and risk management. I’ve learnt much, hope to learn more with active research and wish to contribute not only in academia but also in regulatory and policy circles. I sit on several advisory boards and international councils. I like to try and explain concepts of finance and economics in everyday language so that important debates on these subjects (which have consequences for society at large) are not confined to specialists.
What sort of system do education providers in developing nations like Bangladesh need to look at so we get the right skill sets in those graduating so they can help with the development of their nations?
Education is not just about memorizing information. It is the ongoing ability to seek out relevant pieces of knowledge, connect and critically evaluate them. To that extent, education should not just be about receiving information in lectures and books and regurgitating them in exams. True education equips us to learn, unlearn and re-learn throughout our lives. This kind of mental agility will be crucial to the economy of the future. Furthermore, we need to value vocational training on a par with university degrees. The good news is that technology makes it inexpensive for virtually anyone to acquire knowledge of all sorts. Several top universities make their lectures available online for free. In that context, education is about knowing how to work with that information, especially in a collaborative, team environment.