Backlash against globalisation may challenge WEF ambitions
The success of this year’s World Economic Forum will depend on it demonstrating that technological disruption is a benefit, not a threat
It’s that time of year again where more than 3,000 of the world’s top leaders including heads of state, central bankers and representatives from many of the world’s top companies converge on the little town of Davos, Switzerland, for the annual World Economic Forum (WEF).
The aim of the gathering is to attract people of influence to seek ways to improve the state of the world. The common thread has for years now been one of promoting globalisation: the interaction and integration of people, governments and companies worldwide.
This year’s theme is “Globalisation 4.0: Shaping a global architecture in the age of the Fourth Industrial Revolution”.
However these lofty ambitions may be challenged because of growing resistance across the world to globalisation.
There has been a backlash against international co-operation led by populist political leaders (President Trump being a prime example) who cite globalism as sometimes conflicting with national interest. Indeed the Global Risks report recently published by the WEF highlights worsening economic and political confrontation between the major powers as a key risk in 2019.
The fact that global economic growth has peaked and is now in deceleration mode means that a lot of focus will also be on fostering international co-operation.
This should not come as a surprise given that headlines around the world last year were dominated by phrases and words such as “trade wars”, “walls”, and “Brexit”. The scope of the challenge also comes into stark relief when one considers that a number of global leaders will not be attending this year given homegrown issues.
Of the major developed nations, only Japan and Germany will have top-level representation. Donald Trump has withdrawn the entire US delegation in response to the US government shutdown while France’s President Emmanuel Macron (facing the yellow-vest crisis) and the UK’s Prime Minister Theresa May (facing the Brexit deal decision) prefer to stay at home.
In recognition of prevailing challenges, working principles this year include: “Globalisation must be responsible and responsive to regional and national concerns”, “International co-ordination must be improved in the absence of multilateral co-operation” and “global growth must be inclusive and sustainable.”
The historian Yuval Noah Harari postulates in his latest book that people’s fear of irrelevance in the face of technological disruption and globalisation has given rise to a nationalist upsurge. He further suggests that populist revolts in the twenty-first century could be staged “against an economic elite that does not need them anymore”.
Given these concerns, this year’s meeting will be regarded as a success if through dialogue ways are found to achieve win-win situations. It should seek to demonstrate that technological disruption can be beneficial to all without being threatening to some, and convince nations that ecological threats can only be properly countered through a global response.
The fact that global economic growth has peaked and is now in deceleration mode means that a lot of focus will be also be on fostering international co-operation to support cross-border fixed investment flows which support economic vitality.
Does Davos have SA relevance? Our government certainly thinks so. President Cyril Ramaphosa will be leading a high-powered delegation to Davos and although he has been many times before it will be his first time as president of SA.
With the country suffering from a severe lack of business confidence and hence weak private-sector fixed investment, the delegation needs to convince investors that SA is getting its act together.
Commitment to collaboration between business and government, a corruption clean-up, the stabilising of institutions such as the SA Revenue Service along with a willingness to preserve the independence of the SA Reserve Bank needs to be emphasised.
The ultimate aim will be to attract inbound fixed investment which SA so desperately needs to bolster its economic growth potential.
• Appleton is head of multi-asset strategy at Ashburton Investments.