FROM THE OFFICE OF PUBLIC AFFAIRS

Dean Puto; Dean Abeln; Members of the Board of Trustees; deans and administrators; faculty; honored guests; graduates; friends and family; my colleague, IRS Commissioner Charles Rossotti, who is here today to celebrate his son Edward's graduation-I am honored to speak to you today. Let me first offer my congratulations to the graduates of the MBA Class of 2000-the first graduating class of the 21^st century!

You are graduating today in a time of enormous possibility and opportunity. You enter the business world during the longest economic expansion in our nation's history. And the benefits of this expansion are being felt all up and down the economic ladder. To cite just one great accomplishment of the expansion, for the first time in a generation, the purchasing power of wages is now rising even for the families in the bottom 20 percent of the economic ladder. And you should be proud that all this is occurring during the Administration of a Georgetown alumnus!

You also enter a business world being swept by the most profound change since the Industrial Revolution of the 19^th century. Information technology is driving our nation's-indeed the world's-economic engine. It is bringing growth to every aspect of our economy in a way we have not witnessed before.

Nearly six years ago, President Clinton stood on this campus and warned against economic isolationism, arguing that America's growth and prosperity depended upon our active engagement in the international arena in general, and upon our efforts to open up markets abroad in particular.

Today, we see that the President was right. America's economy has benefited greatly from our active involvement in the new global economy.

As business leaders in the 21^st century, you will all be active participants in this revolutionary new global economy. And as graduates of one of the nation's premier business schools, you will be privileged to have access to opportunities in a way that few others do.

Given the likelihood of your involvement in the international arena, I would like to spend a few minutes with you today talking about the prospects for international engagement and, indeed, the very rationale for America's playing a prominent role on the global stage in the years ahead.

More than most business schools, Georgetown-as one of the few schools that requires its students to study abroad-understands the importance of the new global economy to today's business world. All of you have had the opportunity to witness the international economy first hand in vibrant business centers like London, New Delhi, Buenos Aires or Hong Kong. Many of you here today, in fact, are from other countries. So I do not need to tell you how epoch-making globalization has been.

You have seen that in the new global economy, the economic well-being of each nation is enormously affected by the economic well-being of the rest of the world, and this will become only more true over time. A recurring lesson of the history of international economic affairs is that countries that open their economies to the outside world enjoy better economic performance than those that attempt to "go it alone."

But globalization has benefits beyond even the strictly economic. For example, globalization makes the world safer by reducing conflict. When people are working together for common prosperity in a rule-based system, they have enormous incentives to set aside their differences and work together. The world is a better place than it would have been had we not had the last 50 years of increasing economic cooperation for trade and investment. Further, the world of the future will be a safer place if we continue to work together in a rule-based system that motivates people to find ways to cooperate and to give up their old hatreds and their impulses to violence and war.

Globalization not only affects how countries behave toward one another, but also how they evolve internally. As a result, we have a profound interest in encouraging countries to open up to the international community. As countries open their economies, the need increases for a stronger rule of law, openness and accountability. Ultimately, this strengthens domestic forces and improves human rights.

Our commitment to the open world trading system was reaffirmed on Wednesday by the House of Representatives when it took a significant step in support of opening markets by passing a bill that would grant China permanent normal trade relations. Both sides in the debate had honorable differences over the merits of the proposed legislation and, indeed, the legislative process is not yet complete. Yet, if enacted, this legislation will allow the United States to participate fully in the mutual gains from China's joining the WTO and opening its markets to trade and investment. Further, by engaging the world's most populous country, we increase the chances that it will become a more open, more democratic and more constructive member of the global community in the 21^st century.

As we open more and more emerging markets to the benefits of this new global economy, it is important that we do not forget our responsibility to look out for the many nations that are falling behind. The digital divide, for example, is a very important problem in America and globally -- but we must not forget the more fundamental divide that lurks beneath: the gap between the world's richest citizens and its poorest. At the end of the 19^th century, people in the richest countries had an average income 9 times that of people in the poorest countries. In 1985 that ratio was 52 to 1. Today it is probably closer to 60 to 1.

Globalization cannot be stopped, nor should it. But incorrect policies can be put in place that reduce its benefits and stunt its opportunities. To sustain support for the right kinds of policies, we need to deal with those who have been disenfranchised by this rapidly moving new economy, both at home and abroad. Today, I would like to focus for a moment on the international aspects of this concern.

Although opportunities abound in this age of globalization and information technology, we fail to capitalize on them because discussions between developed and developing countries break down all too often into counterproductive finger-pointing and recriminations. I have been struck by this on a number of occasions-particularly when I was the lead U.S. negotiator for the Kyoto Protocol in 1997 and when I participated in the WTO meetings in Seattle late last year.

Instead, rich and poor countries alike would be more successful in narrowing the gap between them if they recognized their mutual responsibilities.

For those of us in industrial nations, this means:

• We need to improve prospects for growth and poverty reduction in developing countries. In line with these principles, our country has been a leader in helping to create an initiative to reduce debt service from Highly Indebted Poor Countries. This will free up significant new resources for investments such as health, education and support for new farmers. Unfortunately, Congress has yet to fund a substantial portion of the U.S. commitment to this program, thereby jeopardizing pledges from other countries.

• We must back up our rhetoric that trade, and not aid, is the key to successful development by opening our markets to goods from the developing world. In keeping with this aim, President Clinton worked hard to persuade Congress to pass the Africa/CBI trade bill and signed it into law last week.

• We must pursue a successful policy of transferring new technologies to developing countries. As just one example of technology's benefits, advances in mobile and satellite communications are enabling rural communities to join the digital age without the heavy infrastructure investments to lay down cables and wires that previously had been necessary. Further, we must make available not only information technologies, but also medical technologies through new and affordable medicines and vaccines to combat diseases that are ravaging developing nations.

• We need to make sure that the international financial system supports a strong and stable flow of global capital. This has been an important priority for the United States and the international community as a whole in the last two years. Working together, we have achieved key reforms to the international architecture to better protect against financial crises such as those we saw in Asia and elsewhere - and better manage them when they occur.

• Further, we need to ensure that all countries have a voice on key economic and financial policy issues. As part of the work to strengthen the international architecture, there is now a new forum - the Group of 20, or G-20 - that will bring together policymakers of industrial, emerging market and developing countries for informal dialogue on issues of concern to us all.

• Lastly, we need to continue providing assistance to developing countries. Today we are spending 20% less in real terms on foreign assistance than we did a decade ago and, unfortunately, the Senate's latest appropriations bill cuts funding for the international affairs budget by 11% below the President's request.

For their part, developing nations can integrate into the world economy by:

• Implementing good governance policies, such as transparency, accountability, the rule of law and democratic participation. Key among these is the fight against corruption, which is the enemy of development and poverty reduction. In recognition of corruption's pernicious force, 11 African nations recently came together under the auspices of the Global Coalition for Africa to support a set of anti-corruption principles.

• Promoting education, especially primary education. The Asian Tigers, for example, have made a priority of investing in people, primarily through education. This has been one of the major factors accounting for their incredible growth over the last 30 years and for their strong recovery from the recent Asian crisis.

• Fostering open markets that lead to trade and investment, the mechanisms through which managerial know-how and technology are transferred.

• Encouraging investment in physical and technological infrastructure.

• And privatizing their state-owned enterprises, most importantly in commercial sectors, in a fair and productive manner.

If every nation learns to be a "good neighbor" by fulfilling its responsibilities to the global economy, we and all of the world's citizens will share in globalization's outcome-increased productivity, a more stable global economy and greater peace and stability.

Let me conclude today by saying just a few words about your responsibilities as public citizens as you take up your place as leaders in the new global economy.

Thomas Jefferson said over 200 years ago, "There is a debt of service due from every man to his country, proportioned to the bounties which nature and fortune have measured to him."

For some, that may mean a career or a portion of a career in public service. I hope our country is fortunate enough to have people with your talent and energy in public service. Having followed that path myself, I know from personal experience how rewarding a career can be that moves between the private and public sector. But for most of you, fulfilling your responsibilities as public citizens will mean applying some of your time and resources as energetic participants in the private sector to issues of our public well-being.

Regardless of what vocations you may choose or what incomes you might have, each of you can play an important part in improving conditions in our nation and in the broader world community. I urge you to take an active role in doing so not simply because we need our most gifted and talented to spend time on the central issues of our society, but also because I can tell you from personal experience that you will also benefit in the process.

Congratulations again to the graduating class and good luck!

Thank you.