to exchange rate management in the crisis countries which made them more vulnerable. so on all of these issues, there has been a fair degree of progress on the financial reform agenda. but today, i want to talk about one aspect where there has been a bit of progress in changing thinking, but not much in terms of actual action - this is in bailing - in the private sector. the case for addressing this problem seems overwhelming. to illustrate with reference to just one component of private capital flow, the annual average inflows of bank - to - bank capital into the five badly - affected asian countries was around us $ 50 billion. in the nine months following the crisis, the outflow was us $ 70 billion. it was the speed of this capital departure which was so devastating, and was reflected in such dramatic falls in the exchange rates. the starting point is to identify the nature of the problem. the reversals of capital flow had all the hallmarks of a bank run - the sudden change of opinion and the perfectly rational desire to get out ahead of the crowd ( or at least not to be left behind ). the case for doing something about it is threefold : • mexico in 1994 / 95 was a successful example of how to deal with the equivalent of a bank run. as bagehot advised a century ago : the authorities should “ lend freely ”. but it is not realistic ( nor, many would argue, desirable ) to go on repeating this formula for succeeding crises. the us $ 50 billion package which was put together for mexico was, substantively, far greater than anything made available for the asian crisis countries - mexico was seen as a unique once - off event, affecting america ’ s vital interests. so if the funds are not available to fully meet the bank run, then somehow the runs have to be avoided or greatly lessened ; • to bail - in the private sector seems fair. the private - sector inflows have, invariably, come at interest rates which embody a significant risk premium and it seems eminently fair that, where a risk premium has been paid, the lenders should be faced with the consequences of their actions when things do go wrong. it is fair, too, that the authorities impose some modifications to private contracts. bail - outs are, after all, bail - outs of the creditors at least as much as they are bail - outs for debtors, and the authorities are putting taxpayers ’ money on the line to achieve a socially -

further fueled the process of technological change, raising other challenges. major companies have increasingly spread their operations around the world in order to better serve their customers and improve their competitiveness. while corporate revenue and profit growth have been enhanced by globalization, this trend has clearly created strains on those regions and towns in developed countries that have seen jobs and significant portions of key industries relocate to other geographic regions, now benefitting in terms of employment and production spillovers. as global trade between countries has expanded, economic conditions in one nation now have a greater potential to impact economic conditions in others, through the trade of goods and services as well as through capital flows and labour market dynamics. global frontier firms, such as the major players in the tech industry ( the “ big tech ” ) are best placed to take advantage of network effects. this advantage can lock - in their market dominance, creating a winner - takes - all dynamic, potentially leading to increased earnings inequality across firms. concentration allows for greater benefits from economies of scale, but there is a risk that barriers to entry can stifle innovation. the changes that innovation and globalization bring about in the corporate structure and organization and in labour demand clearly need to be understood and responded to. the most significant impact of the current wave of globalization is, again, on the labour market. whether it is low cost or skilled manufacturing workers in china, software or customer service professionals in india, or highly skilled employees in eastern europe, companies can now access new pools of human capital across the globe – a fact that can have a profound influence on their strategy and structure. the availability of a global pool of human capital also presents new challenges as to how firms should organize themselves to take advantage of this opportunity. the uneven distribution of skill requirements and wage levels between advanced and emerging countries has also proved to be a strong push factor for surging migration flows. these changes couple with key secular demographic trends. higher living standards have increased life expectancy around the globe and, for the first time in history, the world not only is experiencing a growing population ( increased by about 50 per cent in the last thirty years and expected to reach 10 billion in the next thirty years, from the 7. 5 billion today ) but also, in most advanced countries as well as in china, a dramatic increase in old - age dependency rates. one billion people today are aged 60 or over, 13 per cent of the world ’ s population, and this age group is growing much faster than the younger ones. this trend