Three themes from Davos 2011
For a week each January, the World Economic Forum convenes its annual meeting in Davos, Switzerland, attended by a broad assortment of global leaders – from government, industry, civil society and the media. Some come to network, some to do deals on the sidelines, some to lobby, and some – as one candid fellow attendee confessed to me – just “to see and be seen.”
The real purpose of Davos, however, is to discuss the pressing challenges that confront the world, in a series of discussion sessions on topics ranging from “the future of employment” to “national innovation.” And that, to my mind, is the real value of Davos.
Like the Silk Road bazaars of 1,000 years ago, Davos attracts pedlars – albeit of theories, rather than goods – and functions as the ultimate marketplace for new global public policy ideas. A sophisticated audience pokes, prods, sniffs and tests their wares. Many ideas are discarded, but a few prevail and end up capturing the “zeitgeist” of the gathering.
Based on the sessions that I have attended thus far this year, three themes have caught my attention:
The shift of power from West to East Every panel that I have attended has identified the rise of emerging markets/Asia/China and India as “the new reality” requiring a “reshaping of global norms.” Certainly, the transition from the unipolar world of the 1990s to the far more complex multipolar world of today is having profound effects, politically and economically. But it seems a bit premature to declare – as one panel suggested – that “Western global leadership is in terminal decline.” While the “West” (the United States, Europe and Japan) faces some real challenges, it still constitutes more than 60 percent of the global economy, undergirds the world’s global institutions and possesses fundamental strengths, including strong innovative capacity, large open markets, strong rule of law, and the world’s best higher education institutions. Nor must the rise of the East necessarily mean the decline of the West. As a prominent Chinese industrialist here wisely observed, such a zero-sum mentality may only end up weakening both.
The acceptance of “industrial policy” For the past several decades, the term “industrial policy” has been in disfavor in policy circles, connoting the disastrous central planning policies of the former Soviet Union and failed development models. But in a number of panels here this week, “industrial policy” has been revived to describe the growing role that governments are playing – and, according to many participants, should play – in shaping markets. As South Africa’s trade minister, Rob Davies, said: “Industrial policy shouldn’t be radioactive; it is what we’re doing.” Not all, however, share this view. Another participant cautioned that, while public-private cooperation is fine, we must remain vigilant to some of the dangers of industrial policy – in particular, trade protectionism and governments picking winners and losers.
Regional integration Global solutions are increasingly hard to find for global problems such as climate change, terrorism and nuclear proliferation. Accordingly, attention this year is squarely focused on regional institutions. For example, Indonesia’s President Yodhoyono identified ASEAN (the Association of South East Asian Nations) as looking to tackle such global problems this year. An African minister raised the exciting prospect of the rise of a unified sub-Saharan common market that will act with newfound solidarity. It seems a fair bet that regional institutions like these will be of increasing relevance and that companies will ignore them at their peril.
Karan Bhatia is GE's vice president and senior counsel for international law and policy.
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