Thank you so much for meeting us on the inside, Mr. Berglöf. Could you please introduce yourself to the audience, your role as an economist here at AIIB and kind of giving us some background information as to how you ended up here speaking with a high schooler from WAB. Well, first of all, thank you for your interest in my background and so on. So I'm the chief economist of the Asian Infrastructure Investment Bank. I'm actually the first chief economist here, which is a great privilege to be part of shaping something from the very beginning.
You know, AIIB is a very new institution, only ten years. And I came in after about five of those. so that's been a, you know, a very interesting experience to be here and privileged to shape something from the beginning. I come immediately from the London School of Economics. So I'm often characterized myself as a academic in recovery. So I'm doing fine until now. But I think I'm now getting a relapse into academia. But I came from immediately before coming here. I actually arrived in the middle of Covid from London, where I was at the London School of Economics and I was leading or building up an institute that later became part of the New School of Public Policy at LSE.
And before that, I had spent nine years at the EBRD, which is the European Bank for Reconstruction and Development, which is another development bank that focused originally mostly on Central and Eastern Europe after the collapse of the Berlin Wall. But it then has gone into Turkey, North Africa and now going to South Africa or southern sub-Saharan Africa. And so of course, I had that nine year experience when I came here. So I had some things of what I wanted to do differently and also some things that I wanted to bring from that experience about how to do things.
So before that, I was more an academic. I was actually worked in Stockholm, but also in the United States. a few different universities. but actually you know, before that I was in public policy. So I and the reason why I came in went into academia was that I was working for this, prime minister in Sweden and he always was looking for facts that supported his view. And so we, one could call this sort of policy based evidence rather than evidence based policy. and I, you know, I liked him and I liked he thought he was a visionary politician and so on but it was very frustrating for me.
I wanted to go deeper and that's why I decided to go into academia and get a PhD and everything that followed from that. So for me now as I'm leaving AIIB in a couple of months, I will go back into academia, but training policy makers. So in a way, you can say the circle is closed. my first question is what drew you to studying economics? I know as a high school student or maybe even earlier, what made you sit in one of those classes and say, this is what I want to do in the future?
What interested you in the subject? No. So I came to this actually I think through being very involved in nature and environmental politics and so on. And I had the pleasure of as a fifteen year old that being at the Stockholm Environmental Conference, which was the first global environmental conference. Being there really affected me. And I then got involved in politics in youth politics. And then and also in actually at some point got elected and was working in central government in Sweden.
And so that was kind of my background, how I came into to economics was really through the political, my interest in politics. And I also was interested in the international dimensions or development issues and so on. And my, maybe first deeper exploration of economics was that I Participated in an essay competition as a high school in the same age as you are now, We were supposed to write About a Nobel laureate and I decided to write about Gunnar Myrdal, who was a Swedish Nobel laureate in economics and.
And it was that experience, I think I went through most of what he had written and thinking about that and getting excited about thinking through development. I think what happened later was that I had a chance as a student at university to come to China very early days and in actually in nineteen eighty. And you know that was a time when there was widespread poverty. It was the first time I had seen have read about development and the development challenge. And I've seen of course, pictures and so on. But Really walking into an environment that was, you know, really very poor.
I remember coming up to Lanzhou in Gansu Province and you know, there was the Landau has just been opened for foreigners like a few weeks before that. And it was full of you know, emaciated children and sleeping in the street. And it was that was very powerful. And then I came back in eighty one in eighty three and eighty six, visited very much the same places, the same companies and so on. Experience of seeing both poverty, but also what could happen if you got the policies right or at least improve the policies.
So I think that's why I became a development economist. So it was a combination of reading about things, but also then eventually traveling. I was basically going backpacking here in China and in that time. And you know when your backpacker, you don't have there's not much separating you from the environment in which you are. And that had made a deep imprint on me. You mentioned that you came to China first here in nineteen eighty and now it's twenty twenty six. It's been forty six years. How much have you seen China grow?
Especially looking at when you first came and now as you're leaving China, what is the growth that you've witnessed? Well, it's almost hard to describe. I mean, you went to places I went to in Inner Mongolia had one hundred and fifty thousand people. I think maybe it was four million today. You know, every city is like that. I don't know how big it was then, but you know, it's a major city today. And so you know, it's and what has happened to these cities in terms of the standard of living and the quality of housing, the quality of infrastructure in general.
Really, truly amazing. And it's almost I think it's really hard to take in for if you haven't experienced. Of course, you can find pockets of old style. Even in Beijing, you can find some of the hutongs and so on. That's how all of Beijing was. There was only one building really higher than, four, four floors. Was the Beijing Hotel at the very center. So you know, it was a very, very different time. And of course, also you know, there were really very few cars in the street.
It's all bicycles. And you know, it was just a very different, economy. And I think in many ways also a different society because there were so the opportunities for people were so much less Us today. You know, people, even people complain. And young people in China may complain about the opportunities that they have, but that compared to what they had at the time, you know, this is it's very, very rich in that sense. And again, I don't want to take away from the reality that many, you know, people here have gotten some education and then find that there's no job for them.
I think that's a very real experience. But when I contrast that with the this complete absence of opportunity that you saw at the time, you know, this was in the wake of you know, the Cultural Revolution, you know, sort of formally, I think ended, you know in seventy eight, something like that. It was still, you know, universities have just reopened in a serious way. You know, high schools, you know, were, you know, often closed down. People, you know, didn't get even twelve years of you know of education, so many of them.
And the content of the education. so a lot of gaps to recover from that experience. You've mentioned your educational background, mentioning that you did essay competitions and so on and so forth. How important do you think education is, especially for aspiring academics, economists and how has that theoretical side also apply to you in the real world application? Because I know in some cases, academics remain academics. I know you've stepped outside of the comfort zone, if I can say that. And how is that contrast between the theoretical side of economics and the real world application of it?
I know you're going back to Sweden to teach a new school of policy or teach policymakers. And how has that shaped your ability to teach people as well? Yes. So first of all, I really appreciate is once you leave the sort of safe rooms of academia. And again, you know, I want to emphasize that I really believe that, you know, we need these tools that academic training gives you. So I think today, without the masters, I think it's going to be very difficult for you to orient yourself again, what exactly the world will look like with AI in fully integrated into the economy is hard to judge.
But I think the tools that you get from this kind of training are very important. It's something that no one can really take away from you because, you know, you can you know, part of that is I think with AI is going to be about amplifying these tools and helping you to become even more efficient in how you use the tools. but that I think is a very important base. But once you have that, you know, getting this opportunity to that I've had to you know, go out and see development projects being implemented on the ground and understanding, you know when does it work and what makes it work.
And you know, how can you transform people? How can you scale up, simple ideas? How can you help people get opportunities? I think this is what development is about. And I think just reading about it and studying, even if you do, research it. And of course, research today is for an economist, it's much more interesting than it was when I got my PhD. Today you can actually spend two or three years, you know, more or less living in a country, you know, doing, different, development studies and so on.
And even if you do that, getting out, working in an organization, working in a team, you know, understanding what it takes to put together a development project, you know, you need so many different skills. And it's very humbling for an academic to think that he or she knows everything, how it works and so on. To see that you need all those skills. You need the legal person, the risk people. You need the safeguards, people you need all these people to put together, a real development project. and if one of those skills is not there, the whole thing can collapse.
So it's so it's, you know, it's, so I'm very, I feel very lucky that I've been able to move back and forth between the academic world and that development banking world and in the development banking world, since you're working in particularly in my previous in my previous, development bank, you know, everything there was about the private sector interaction and how to get the private sector into development projects. And I think that is a sort of very tough test on your ideas. And if, you know, if you cannot sell a development project to a private company, you know, there is something, you know, perhaps something wrong or at least you need to think about how can you make that private sector company interested in this project?
What kind of policy environment, what kind of maybe, you know, some concessional financing contribution that makes it feasible for that for that company to come in? We talk about bankability. How do you make a bankable? How can you finance it? And I think that is, you know, a very tough test and something that is from my point of view, very intellectually, very challenging. Also in what aspect is it intellectually challenging? Could you provide some examples? so for example. So we are now trying to lend money to banks in China.
We don't do all that much in China, but we do some things in China and particularly nature finance is something that China has built sort of the policy environment, the policy tools are there for you to do native finance. So we are working with these private banks. And so we lend money to them and they own land for nature investments, whether it's like, improving, the banks of a river using, nature, using, different vegetation and so on instead of cement for example or using another project that we are, indirectly financing is a project combining solar and fish farming and the fish benefit from the solar covering and making it cooler.
And it's better for the fish and the water cools the solar panels. So it's, you know, so it's a, it's a very nice example of nature. but the challenge for us is nature today, no one really pays for it. So we need to find a way of how do you get someone to actually value nature for what it is? And you know, it's so important. You know, we couldn't live without nature. We call it talk about nature as infrastructure, nature as something that is the most important infrastructure for sustaining life on earth. But we don't value it properly.
And the way you can do that is to have some kind of government scheme that here in China, there's something called the eco compensation scheme, which is a way to. Value nature using various methods to assess what are the. What is the contribution to purifying air, purifying water, helping with pollination and so on. All those things are valuable things that nature provides, but no one really values it. And what China has done is to put in place. The other countries have done it too, but China has a very effective scheme that compensates companies for or communities for doing, taking care of nature assets.
And that we can use that to that eco compensation scheme to make these projects underneath bankable so they can benefit from that. And then we can, maybe put something on top of that. We will, you can get some credit for the binding carbon. So something that, you know for climate mitigation, you want to reduce CO2 in the atmosphere. And many of these nature projects. Binds carbon so we can get some credits and people, we have a market for carbon in China and you can get some credit for that. So all these things it's about it's like a farmer trying to you know, get his land to use it for many different things.
You know, you can grow some vegetables. You can have some cows or goats. And then he can maybe have some solar, you know, plan of some sort. You need to think of all the different things that can finally make this farm bankable or viable. And that's how you have to think about these projects in nature. and this is very exciting to try to think of all the instruments you have and how can you make, how can you bring, can you bring some tourism into this? Or is there, you know, some we had a we looked at the project of mangroves in Egypt and.
And suddenly we realized that one of the reasons why the local population was so interested in this was that the honey that comes from mangroves is very valuable. So this was a, you know, an incentive for the local population to take care of the mangroves. And you know, these things are intellectually interesting to think about. How do you make this work and how can, you know, we need to protect we need to clean the air in Beijing. And you know that, you know, all the thought that went into, you know, how can you start from cleaning the air, you know, closing down plants and then starting to invest in a lot of nature.
If you come around the bank and you see amazing wetlands and lakes that have been created to capture carbon, among other things, also to help clean air and water and so on. So I think once you start thinking about all the possibilities that nature can provide, you know that's that's also something that we need to use our mental models and our or the tools that we have learned from finance to try to bring resources. And we can do something with government finance, but it will never be enough if we can't also get private companies into that.
And that to me is the real sort of intellectual. It's a very practical challenge, but it's also interesting to try to think about how you. so you're saying that what makes it interesting is that it's so multifaceted. It's complex. there's different intricate details to it. another question that I had is that you touched early on AI emerging now and historically, what skill sets were you looking for in people working for you? And how do you think that will change in the future? What do you suspect will become more valuable in human capital and the people working in development, banks and such professions?
First of all, I think that AI is going to change, at least for the kind of things I do I really will have a major impact. and I think the component that will be very difficult for AI to replace is the kind of judgment component and the also the kind of values component that, you're trying to you know, understand how. You know, it's one thing to analyze a problem, but in the end, you have to take a stand on what is important here and what do you believe in and so on. I think that it's that experience and ability to think across different issues.
I think, again, those things are hard to replace with AI, but I think AI can help you come to these kind of conclusions. For example, if you go and ask an AI tool to help you. What kind of feedback am I going to give you? as an employee of mine, you know, I can, I can get a judgement myself of what we are. AI may give you a tool. You can say, you can ask the question from this perspective or from that perspective or from this perspective. And once you thought through all those different perspectives, maybe that changes how you assess a person.
But ultimately you need to have that ability to see what's important, what's not important, what is, what is, what is, what is meaningful for this organization. so I, you know, I think it's, you know, everything is going to change with AI and you know, it's going to affect every person at every level, but that judgment component and ability to read across situations and learn lessons from different. Different experiences. I think that's going to be very hard to replace, but. You know, we are all, I think learning about the impact and learning about.
How we can. How we can apply these tools to our own reality. So to say. You've mentioned the judgment component and making decisions. do you think it's more important to be a generalist in this world? so I think from what I've said so far, you know, generalist capacity is going to be very important. Having said that, you know, the fact that you have been able to go deep in one area can also I think, help you understand what it means to have very specialized skills, both for the what it teaches you about what you know, but also what you don't know.
You know, the when you go deep into one area, you realize that there is of course, a lot more to learn, but there's also the risk that you lose perspective and so on. So I think it's that ability to shift between this specialized perspective and that generalist framing. But I think the AI will help you more on learning from that specialized in you. They can probably help you go deeper, more quickly, but hopefully it can also help you come back to the generalist perspective. So what you're looking for now has obviously changed a little bit.
And if you were a student, seventeen, eighteen years old, what would you do differently now knowing the situation of AI? Yeah, I used to say and I think I even said it now in a previous interview that the, these tools that you get through education and you know, at different levels, you get more tools and those tools is something that you can never take away. But I think the value of some of these tools have been diminished by AI because they can replace them. So I think, the, you know, the key will be to be able to use this tool to amplify your own capacity and work with the tool.
So and Obviously, you know, it's about learning, you know, how to do the right prompts and you know how to approach a problem. But I think at every step of that process, AI is going to be able to give you, some input. And but at the end, I think there is, again, this generalist value. People will say to you that, you know, you are you should read, you know, the classics, you should read widely in humanities. And I believe in that. but I don't think that's the complete answer.
I think you also need to be out there, you know, getting your real world experience, you know, learning on the ground and because, you know, a lot of the things that affects our ability to judge different situations come from real experience, not just from reading about it. so. You know, people often come to me and ask, you know, what am I going to you know, what do you advise me to do in terms of a career after I finished my education and so on. And often I say, you know, you know, it is useful to think about life as a long lifelong learning and not see.
That you will have to go back many times to retool and rethink questions and not look at a particular. Point as this is the end point of learning. And now I'm just going to go out and do practical things, you know, even when you work in the workplace, there's a lot of learning going on. and I think the key in life is to keep that circle going that you are you are getting ideas, you apply them, you think about, you know, what did you learn from applying them and then coming back and confronting what other people's experience may be through an educational program or some academics have thought about this issue for you know, but never forget about that reality check and getting some real.
It matters a lot, you know in what context do we learn things and what do we associate with a particular lesson and so on. So when I talk about that experience that I had when I came to China, I think that you can never get that. That feeling and that also maybe passion that comes out of out of that just by reading about it. I think you need that real exposure that real, you know, being around those poor children or around seeing those stunted farmers who had, you know, gone through so much hardship in the Great Leap and so on here in China, all that very.
Real experience. You can read about it, but you can, unless you have really seen it yourself or maybe talk to people and have that human interaction, it's very hard to convey. so I think, we when we think about life careers, not get locked into to one track, it's all about, It. You know, it's all about education. It's all about practical experience. You need to get used to going back and forth and never give up on learning and development. You've mentioned that when you came here to China that it was a very impressive experience.
It was it made you passionate about development economics as well. but obviously also talking about the theoretical side of economics that you had learned before and now coming to AIIB and working at different developmental banks where the stakes are obviously greater. You don't have economic simulations, but you're, you're playing around with real money. there's losses to be made. How has that responsibility shaped your thinking? and so on and so forth. You know, you it's clear that, as I said, you know when you understand how much different skills go into creating a product that's very humbling for someone coming from a, an academic environment where you think we have all the answers and we understand all the different dimensions of a problem.
But. I think there is also a. great value to you know, once you see what goes into a project in terms of you know, both the financial resources, but also the human effort. And it makes you more conscious of what the implications of you know, getting things wrong or the ways that, Wasted. You know, poor policies can cause or as I said, you know, some skill missing in how you prepare the project can completely undermine it and waste resources. So I think you develop a certain. Understanding for you know, what it takes to get things right, but also an appreciation for the scarcity of finance.
And you know that you, if you don't, you know, we talk a lot about opportunity costs. You know, what could this money have been used for otherwise? And I think that's something you always have to have in your mind that what you now trying to achieve here, is that really the best use of these resources? Many, many of these countries where we work, they are very constrained in terms of all the needs that need to be satisfied and having a clear mind that there are all these different uses. You know, we talk about, you know, the energy sector, but then you have, you know, education, you have health and so on.
There are infrastructure needs to. Be seen in the context of. What matters for the humans that are living in that environment. So I think that's something that, again, thinking about projects like we do here in development Bank, every project is like a small experiment in development. and you know, what's so key is that we learn as much as we can from that experiment and that experiment. We think very carefully about how we design it because we both want to learn as we are implementing, but also of course, afterwards.
But. We are affecting people's lives and we need to be very conscious of the effects we have. And so if we get it wrong, it is, you know, it has real consequences. And I think that something that, you know when you if you worked on in stock markets or so you know, you don't have that direct sense of the impact of what you are doing. And you know, you don't feel so much, you may suffer some losses because you invested in a company that didn't work out. but here it's much more clear that, you know, you, if you don't get a development project, right, you know that can have, you know, very significant impact on people's lives and so on.
So I think that's the responsibility you feel, as a development bank. And of course, ultimately we know that these are taxpayers money originally and we have a responsibility to use them as well, as possible, but also make sure that they last as long as possible so that we can continue working as a development institution. I forgot to ask this earlier about what interested you in joining AIIB and also what were your expectations going in? What goals did you have and do you think now five years later, six years later that you've achieved most of them?
So obviously, you know, my desire to come and live here in China. I had never lived in China. I come here a lot, but I never lived there. And you know, have a, chance to. Experience the culture or the language and so on. All that was part of the attraction. But the most important one was to be part of a new institution that will become, you know, globally very significant institution and be part of shaping that from the beginning and coming to an institution that was about, I guess, fifteen years old when I joined it and it was quite well established.
And I took over a job that someone else had taken over from someone else and so on. so there was a lot of legacy that I a lot of things from the past that I had to deal with here. There was a chance to come in more or less from scratch. And that was both of course, exciting opportunity, but also quite a responsibility. So you felt that you better get it right because it's. But luckily I had that experience. I think without that experience, I would have felt pretty lost, I think in how to how to how to do things here.
But I knew both what I thought worked well in my previous job, but also what didn't work so well and maybe what things mistakes I had made and lessons I learned from that job that I could bring here. But and then of course, it was also about the kind of people that we attracted here that it was very important to get the right people in place. and you know, these were I came here in the middle of Covid, so it wasn't so obvious that you could attract people to come here. But I was very lucky. I really got some fantastic people here.
And that also makes the experience so much richer that we are not, you know, not mainly about me. It's about what the whole team did and that, you know, we could build something together that we are proud of. And I think that's, you know, I think that's in life that's that's very important. And that I think and we know this from you know, we do surveys of what people think and people are very proud of working for this organization. And I think that, you know, it does contribute something meaningful. I know you've worked on several multiple projects here.
Which one has been the most impactful in your opinion or which one was the most fun to work on? There are so many projects here, but I think what was particularly exciting for me and I think for my team has been. But now, almost two years ago, we got the possibility to do policy based lending for climate. So this is a you know, you lend money to a government that uses it for implementing climate policy, whether it's climate mitigation, you know, reducing CO2 emissions or adapting to reducing the impact of climate change and working, moving from working on individual projects to working on policies that can help, you know, make many more projects work better and so on.
It was very exciting. And the single most exciting one, I think, was the first, what we call standalone projects. We had done a few projects together with the world Bank or with the Asian Development Bank, but this was the first one we did on our own in Brazil. And What was interesting was that for Brazil, this was a big opportunity. It had the was the host of the Cop thirty. You know, this annual. Conference that tries to push the climate agenda. And when they were hosting this, you know, we had this opportunity to interact with them to put together a policy package.
And what was interesting with this particular approach to development is that, you go to a government and we have some money. We want to support your climate policies and show us what you have done and what you want to do. And then we say, we would like to work with that or that policy and we want to help you implement it. And so and that's a very different form of development than the traditional development where, you come in and say, you do that and you get money or you know, if you in some time in the future you do, you will get paid and so on.
And I think that form of financing also has its role. But I think this kind of trust based, development finance is very exciting. And when we worked with the Brazilian government, they did a lot of things right. From our perspective, they really integrated the climate policy into their overall economic and industrial policy strategy. They took special measures to bring in the private sector. They tried to establish carbon markets and trading in. In carbon offsets, We had pushed an agenda of nature's infrastructure and thinking about how we can improve nature.
They took a program on framework for managing mangroves. They had elements that. Try to make the health sector being less climate, impactful or reducing the carbon footprint of the health sector, which is quite significant actually in Brazil. And then making it less vulnerable to climate impact and so on. So there was a and also some early warning systems for heat and air pollution. So a lot of very meaningful components that could be packaged under this under this climate policy. And it was, you know, working very closely with the Ministry of Finance in Brazil, even in a way, forcing conversations that they wouldn't have had in the past, you know with the Minister of Health with the Minister of Forestry and so on.
These are very interesting experiences that teaches you a lot about how to how to do, development, finance and also you know, working with people in the country that are very engaged on particular policies, all that is very rewarding and something that is hard to achieve in the same way in the academic world for example.
And also understanding a little bit what, you know when people talk about in the abstract about ownership and about countries owning, you know, embracing their policies and not just being told what to do, I think, you know, it goes for all of us. I think we like to come to our conclusions ourselves. We can we listen to advice, but we want to you know, be own our own decisions and not be necessarily told what to do all the time. And I think it works very much like that in development finance to for countries to you know, learn from experience, but come to their own conclusions, not being told what to do or not being punished for not doing something or and so on.
So I think that is something we write about in development literature, but it's really only when you see it working on the ground and you see the pride that they take into the these policies that they're implementing and how, you know that pride and that professionalism that they feel, how that will sustain the policy over time. If, you know, we came to them and said, you know, you do that. And they didn't really believe in what they were doing. They do it for you know, it wouldn't last. And you know, is that sustainability or that ability to make sure that the policies are maintained over time, which is often the most difficult thing.
So that is the most meaningful project I've done since I came here. while preparing for this interview, I read up on the Vienna Initiative, which I think was also one of the more meaningful projects that you've done. in two thousand and eight for the listeners who don't know what that is, could you explain what you were working on? No that was, you know, it's always, about timing in life, you know, so I was very fortunate to work in this development bank at a time when the global financial crisis broke out.
And you know, this is, you know, a long time ago for you guys, but it was a quite scary time because it looked like, the whole financial system of the, particularly in the advanced economies was about to collapse and in some aspects also did collapse. and we as a development bank and have been a few years then at the banks, I had kind of understood a bit what the bank was doing. The bank was very important shareholder, also very important lender to more than two hundred banks or two hundred and fifty banks in Central and Eastern Europe.
And these banks in turn were owned by Western European banks, not all of them, but most of them. and what happened in the global financial crisis that there was suddenly a pressure on this money that was in these banks to be re repatriated or re sent back to their headquarters. And if that happened, it would the trigger this very dramatic outflow of capital from these countries and would seriously also impair the value of the parent banks, the banks in Western Europe. and it was that process that we tried to address through the Vienna Initiative.
And the Vienna Initiative was about working together. These were private banks mostly. and they were working with you know, regulators, policymakers in central East Europe, but also policymakers in Western Europe that were worried about their banks and so on. So the idea was to try to create an atmosphere when or in an environment that allowed, instead of people running to the exits Trying to manage down maybe over time and make sure that you don't. Get this very dramatic falls in values. And we have seen some of that fall in value here in China.
But it was very dramatic. And in some sectors there was very significant falling in value. So I had seen this happen in my own country in Sweden in like ninety one, ninety two, so fifteen years, sixteen years earlier. and what was clear then was that if you, if you could keep these banks talking to each other and to the regulators, you could prevent the collapse. What happened in Sweden was that worked for a while, but then one of the banks had a strong incentive to deviate.
And then the whole thing collapsed. And it was that where we were trying to achieve with the Vienna initiative to make sure that while every single bank has had an incentive to run for the exit, they as a collective did not have the incentive. For us, it was about keeping that collective, keeping these banks, talking to each other, talking to the regulators, talking to us. We could be we could also help with some, you know, bridge financing and so on in that environment. So it was a unique role that these multilateral development banks can have in crisis situations that they can help coordinate policies to reduce, the risk for more extreme outcomes.
So that was very motivating. You know, it still exists. The Vienna Initiative, its partner, the European financial architecture and what really, ultimately what it's about is about linking these home banks with these Western European banks and these host countries so that you see both perspectives. You know, if this parent bank did something to this subsidiary in that host country that would have very dramatic effects for that country that they didn't really care about so much in the in the in the host in the home country and in that parent bank.
But it was and every single bank did that, you would have this kind of collapse. And that's what we managed to avoid actually at the time. And there were many things that went into to that. And we worked with the European Commission with the IMF and so on. But it was very much a collective effort. And there were times we were like two hundred people in the room just to make sure that everyone talk to each other and so on.
What were some of the main takeaways that you had? I think the main takeaway, you know, so the takeaway is, first of all that there is this possibility to coordinate. And if you have institutions like development banks for example that can multilateral development banks are by construction, you know, have many countries owning this together and trying to you know, take into account the consequences for the system as a whole.
And the fact that, you know, we were at the time shareholder in so many banks and had loans to so many banks, made us. We had a very strong self-interest in playing that role as well. So I think that's what you have to think about the how do you design a system that where everyone in the system has, a desire to cooperate and also we also try to find ways of punishing those who deviate. So in a way, we are forced bank CEOs for example to write public letters where they're committed to keeping money in the country and so on these kind of things to make it, you know, make it very costly for someone to run away or break away from this agreement.
So you know, but this is, it's, I was very fortunate to be part of that. And it was, you know, as I said, timing is important. You know, it's the same thing with the Covid here. It was, you know, you learned a lot from that experience. And I guess we would prefer not to have Covid. But Covid also had this. We learned a lot about the weaknesses in the international system and you know in providing vaccination to everybody and you know, what strategies worked in what countries and what contexts and so on.
So I think every crisis situation like that gives you a lot of a lot of lessons that hopefully helps you next time. There is something similar happening. I mean, you've through throughout your career learned multiple lessons and now you're leaving AIIB in a couple of months time and you're going to educate a new school of public policy. And having learned all these lessons, how do you prepare to teach all the new pupils and. And what are you looking forward to achieving? I think that there is there are a lot of lessons in public policy and in governance that we can meaningfully teach.
But there are also ways of teaching it that are more effective than others. And one thing that I certainly want to do is to give students the experience of working in developing environments or not necessarily just developing countries, but also developing countries. And I think, every student will at least at one point during this, it's a two year program that we want to teach at least at one point and probably several points. Be forced to work in a ministry or a government agency in a developing country or and but also probably working in different places in Europe as well.
And so it's that combination of tools and you know, models for thinking about the world, but then actually forced to apply it. I have a, you know, yes, one of many experience, but I had experience, I used to work a bit in Albania, small country, but interesting because, it had a government at the time that was very willing to reform and trying new things and so on. And I had a colleague who worked at Harvard and Harvard, at the Kennedy School at Harvard and he had brought this, I think, sixteen students to work for eight weeks in different ministries.
So I guess in eight ministries or so in Albania. And he asked me if I could be the person who sort of examined them at the end of this and they write a paper on some issue in that ministry. And I remember one of them was about it was a fact and it's a fact in many countries, actually that fifty percent of all the power bills. So the electricity bills of companies and households were not paid. and you know, this, as I said, this is something that a situation in many countries.
And so I think for the students, this was a new thing. They had never thought of that possibility that Actually people didn't pay and it wasn't much that the government could do. At least at first glance. And then so the first insight was that this was actually very common. So and then they could try to understand, you know, why was the common, you know, what was it about, this particular countries that made it made this happen. And then they had to look at what had been tried in different countries and what had worked, what has not worked.
And try to explain, you know, I think that's a and then they had to expose, their host ministries to this these lessons. And then they could see what had had they tried. Was there some new ideas and how did they respond to that? Or was that was that going to work in that particular context that particular measure? I think that's that's iterative process between, you know, observing something, trying to understand, you know, how important is this? You know, what do we know from before? What are the analytical tools that have been applied to this?
And so I think that's how I want to shape this school. And of course, having a global group of students so that you learn from that experience too. I mean that's, I've been very lucky to teach mostly in this kind of very diverse student environment. And you get so much out of the that diversity. I think you have a little bit of that in your high school as well. Yeah. People come from very different backgrounds and that contributes a lot in the class room situation, particularly if you're going to understand policies, because what you're going to see is that, you know, some policies work very well in certain environments and don't work at all in other environments.
And you know, understanding why that is. You know, what have different countries done to try to find new innovative solutions and what made those innovative solutions possible? Is that something that can be transferred to another environment? I think that's the way I think you want to learn about policies. You don't, you know. You want to I think you want to have cases and so on but it's not enough. It's that direct environment sitting inside a government entity or a private company for that matter and being forced to sort of confront those ideas and maybe those.
Sort of frameworks that were behind particular teaching case and so on. It's not until you're really out there and talk to the people and see, you know, what reality they see. I think that's what so that's that's the kind of teaching I hope to develop. And then also very much, you know, I've been fortunate enough here to be to work a lot with emerging and developing economies and particularly with these large emerging economies like China and India are most important country operation. I worked a lot in Brazil and I want to find ways of engaging with these countries on these global challenges.
And I want students to feel that they can participate in that in some way. I don't know exactly how to do this yet, but that's going to be part of what I'm trying to create so that The sense of building bridges between different countries and between rich and emerging economies. I think also the way that you spoke about it, it very much reflects your what you've learned and how you've learned in your life that iterative process, academic real world application and going back and forth.
And for other students who are interested, what would you recommend for them to do what to read? What podcasts have been especially helpful? Just anything that they could do to really accumulate as much knowledge as possible? Yeah. Again, you know, read widely. And I think one thing that is very easy to fall into a particular, how should I, you know, one of these many. Echo chambers that echo chambers that we have. You know that where we only hear our own people with the same opinions as yourself.
We are all guilty of that to some extent, but I really encourage people to try to reach across these different, opinion towers if you want. And. And I think always try to hear the other side of the argument, you know, because that's how you learn. Even if you don't change your, you try to understand because you will eventually have to work with people of you know, many different opinions and you know to understand, you know, where do they come from? It doesn't change your own view.
You need to find ways of bringing them along. And then of course that's a, you know, much deeper challenge in the current societies that we are becoming very fragmented both as a world but also individual countries. And that is something that. You know, very important to address early and often for that, you need to break out of the logics of these search engines and so on. How you get introduced to different sources of information. And I think here actually AI can help a lot because you can actually the way you ask a question there can really help you.
Get a much broader view viewpoint And follow news and go beyond the news you get on your social feed. I think that's unfortunately, you know, a lot of the information that we get now come that way, but it's, it's very hard to convey the complexity of the situations that are being described. but also getting the real experience, you know, being out there and not taking everything from your, not just reading, but also experiencing on the ground and.
Shaping your own, shaping your own opinion. For upcoming economists, this is like the final closing thing. What problems do you hope that they address even after you retire? What do you hope will be resolved or what field would you like to see be expanded? And I think economics today is a much richer discipline than when I was first exposed to it. And it's richer because it deals with. A lot more issues and a lot more important issues. I mean, I'm not saying it wasn't didn't deal with important issues before, but there were many important issues that it didn't really deal very well.
You know, like our climate, our nature and so on. These are things that at least most mainstream economists were not. So didn't deal very much with that. And I think that has likely changed, but also changed is that it's much more open to data and evidence and experience from other, you know when I studied, you were not when I got my PhD, you weren't really supposed to work with any other data than American data. And then, you know, you could use European data today. There's such a rich amount of data from all kinds of countries.
So I think That combination and that respecting that there's also a value to doing deeper economic analysis in all environments. And I think that's something that makes economics so much more interesting today than when I. And also that when you get the for example, economics PhD today, it's possible to spend several years in a country and doing studies, learning that was just almost impossible before and or at least was very strongly discouraged suddenly by the best universities. And I think today is different.
Actually when I was in the US at Harvard, there was only one single person every year who did development and MIT, there was only one retired professor who worked on development. You know, today it's very different. so economics has evolved a lot and is also interacting much more with other disciplines, you know with psychology, you know, obviously political science and you know, increasingly with different science fields too. So I work a lot on nature now, climate, very close interaction with science.
So I think, there is, it's a very exciting. Profession or discipline to go into now and you know, many more opportunities also to draw on to use the new tools of AI to scrape information. You know, we have so much more data. You can, you know, we spend a lot of time and effort now to build data sets available by using different AI tools to collect the data. So we don't have to maybe do all these surveys and so on. Some of these can just be scraped off the internet. And so these are, you know, a much richer world to explore than before.
Is there anything final that you'd like to leave for our guests before we conclude?
No. Just keep an open mind. Thank you so much for meeting with us. Taking the time. Thank you so much, Mr. Berglöf. Thank you. Thank you. Call me Erik.
