The World Economic Forum’s ritzy annual summit of the political and powerful in the Swiss ski resort of Davos turned the focus on a legitimate concern for many. The summit traditionally emphasises global interconnectedness and cooperation but at a time when the ‘national’ seems to be trumping the ‘international’, the meet’s theme of ‘Creating a Shared Future in a Fractured World,’ provided an apt framework for global leaders and minds to brainstorm and nuance their positions.
European leaders defended free trade and global cooperation, laying out a vision to counterbalance what many perceive as a rise in the more brash, nationalistic policies of President Trump. Concerns that the US is turning its back on globalisation — which many credit with increasing wealth but also creating inequality — were accentuated when Trump backed new tariffs on imported solar energy components and large washing machines.
“We believe that isolationism won’t take us forward,” German Chancellor Angela Merkel told the summit, held from January 23 to Jan 26. “We believe that we must cooperate, that protectionism is not the correct answer.”
While acknowledging that it is legitimate for each leader to say “My country first,” Italian Prime Minister Paolo Gentiloni said trade was the means toward economic growth — and that protectionism runs counter to that. French President Emmanuel Macron ironised on Trump’s arrival by referring to the huge amount of snow that struck Davos during the summit. It “could be hard to believe in global warming. Fortunately, you didn’t invite somebody skeptical with global warming this year,” Macron said before calling on the global community to tackle the inequalities brought into play by global capitalism.
“America First does not mean America alone,” US President Trump told the summit while clarifying that “I will always put America First. Just like the leaders of other countries should put their countries first.”
“When the United States grows, so does the world. American prosperity has created countless jobs around the globe and the drive for excellence, creativity and innovation in the US has led to important discoveries that help people everywhere live more prosperous and healthier lives.”
Trump said though he supported free trade, “it needs to be fair and reciprocal. Because in the end, unfair trade undermines us all.”
Thaw with Trump
Snow was piled high outside, but inside the Davos summit, relations between Trump and the assembled global elites seemed to thaw. While there were scattered protests, some critiques and many panel discussions with Trump-wary titles — ‘Democracy in a Post-Truth Era’ and ‘The Global Impact of America First’ — the President’s visit also brought him praise.
Taking time for some diplomacy along the way, Trump played nice with British Prime Minister Theresa May, batting away the idea of a strained relationship. He worked to mend relations with a key African leader following his use of a vulgar term when referring to African nations. Rwandan President Paul Kagame said they had “good discussions” on economic and trade issues.
Trump went around the table of CEOs, bantering with the president of Volvo about Mack Trucks, noting to a Nestle executive that he’d read candy was not their primary product and telling a Bayer executive he takes a daily aspirin. “I should say, I only take Bayer,” Trump said. “One aspirin a day. So far, it’s been working. But it’s a great company. So are you going to be investing in the US?” Werner Baumann responded: “Yes, we are.”
India Makes Its Points
On day one of Davos, Prime Minister Narendra Modi listed his three most significant challenges to civilization — climate change, terrorism and the backlash against globalisation.
He also spoke about the opportunities and dangers of technology, India’s plan to fight income inequality, job creation, and how the country is “cutting the red tape and rolling out the red carpet” to international trade and investment.
Addressing the pushback against globalisation in some countries, Modi said: Many societies and countries are becoming more and more focused on themselves. It feels like the opposite of globalisation is happening. The negative impact of this kind of mindset and wrong priorities cannot be considered less dangerous than climate change or terrorism.
Telangana was in the limelight at the WEF on Friday when IT and Industries Minister KT Rama Rao got the rare opportunity to represent Telangana in a panel discussion on ‘Leveraging Digital to Deliver Value to Society’. Such discussions are usually attended only by Central Ministers from various countries. Rao was the only Minister representing an Indian State.
The discussion highlighted Telangana’s achievement in making the State go digital, including the T-Fiber project to provide broadband connectivity to every household, various digital services to increase digital literacy and digital transactions. TS-iPASS, the single-window clearance initiative for investors, was also shared with investors.
The WEF lived up to its reputation as one of the best platforms to engage in a short period with a large number of senior political and business leaders from across the world to empower global collaboration.
On the Sidelines
Concern on Conflict
A WEF survey found that more than nine in 10 experts are worried about worsening economic or political confrontation between world powers, amid a trend toward “charismatic strongman politics.” The WEF cites a “deteriorating geopolitical landscape” and increasing cyber threats as key factors behind a pessimistic outlook this year – adding to continued and pre-eminent worries about the environment.
The Global Risks Report released on January 24, notes that a global economic rebound can help solve some problems, but it also pointed to increasingly complex challenges. “Global risks, nowadays, are so interconnected that they can threaten the very systems on which our societies, economies, and international relations are based,” said Alison Martin, chief risk officer at Zurich Insurance Group, which contributed to the report.
Margareta Drzeniek-Hanouz, a WEF executive committee member focusing on economic progress, called the results “striking.” She noted that on “political and economic confrontations, 93 per cent of the respondents think they will increase somewhat or significantly in the coming year.” WEF said four in five survey respondents expect rising risks “associated with war involving major powers.”
IMF Outlook on Global Growth
The International Monetary Fund upgrading its outlook for the world economy, noting surprisingly strong growth in Europe and Asia and predicting that US tax cuts will give the American economy a short-term boost. The IMF forecast global growth of 3.7% for 2017, which would be the most substantial annual growth since 2011, and to 3.9% for this year and 2019.
“Global growth has been accelerating since 2016, and all signs point to a continuous strengthening of that growth,” IMF managing director Christine Lagarde said in a press conference at the WEF adding that “this is very welcome news.”
The international lending agency says 120 countries, representing three-quarters of world economic output, enjoyed economic growth in 2017, creating the broadest global expansion in seven years.
Inclusive Development Index
The Inclusive Development Index 2018 was published just as the WEF met. The metrics go beyond GDP to look at living standards and how effectively nations are future-proofing their economies.
The key conclusion? Small European countries excel, while the rest of the world has work to do. Norway is the world’s most inclusive country.
Growing Income Inequality
82% of the wealth generated last year went to the richest 1% of the global population, while the 3.7 billion people who make up the poorest half of the world saw no increase in their wealth, said an Oxfam report.
Billionaire wealth has risen by an annual average of 13% since 2010 – six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2%. The number of billionaires rose at a rate of one every two days between March 2016 and March 2017. This huge increase could have ended global extreme poverty seven times over.
AI More Important than Fire
Google chief Sundar Pichai said that artificial intelligence is more important to humanity than fire or electricity. He said that despite concerns about AI, the potential benefits couldn’t be ignored.
“The risks are substantial, but the way you solve it is by looking ahead, thinking about it, thinking about AI safety from day one, and to be transparent and open about how we pursue it.”
IQ of Love
Alibaba founder Jack Ma offered a success secret to beat the age of automation. “If you don’t want to lose quickly, you will need a high IQ, and if you want to be respected you need high LQ: the IQ of love,” he said.
On the impact of AI, Ma said: “Artificial intelligence, big data is a threat to human beings. I think AI should support human beings. Technology should always do something that enables people, not disable people. But computers can never be as wise a man. Service industries offer hope – but they must be done uniquely.”