By: Siva Sooryaa
Davos Recap: Protectionism vs Free Trade, Global leaders Vs Academicians, Businessmen Vs Economists – What happened at this year’s WEF? Some highlights
Between the 23-26 January of this year, 70 Heads of States, 900 CEOs, 3000 industry and commerce leaders and some of the world’s biggest leaders in the spheres of business, politics, education, technology, and economics congregated in the small ski resort of Davos for the annual World Economic Forum. Buried in 6 feet of snow, this was the 31st edition of the conference and this year’s theme was “Creating a shared future amid a fractured world”.
The theme was very germane given how the current divided and conflicted status of the world over a range of issues. There have been many instances of countries acting with “protectionist” interests or breakaway priorities rather than creating an environment of economic interdependence. The US withdrawing from the TPP or the UK walking out of the European Union, thousands of refugees rendered stateless and economically destitute, increasing immigration restrictions… All of which have shown that countries and their societies have in recent times acted with narrow priorities rather than the broader interests in mind. As usual, the Davos conference attempted to address those pressing issues by bringing in experts from a wide range of fields together over the four days. This article covers some highlights of this year’s conference:
Day One: India welcomes foreign investments offering skilled but cost-effective labor…
On Day 1, the Indian Prime Minister Narendra Modi made a hard sell, presenting India as a platform for foreign investment and start-ups, which offers skilled and cost-effective labor and a manufacturing hub. He directly identified protectionism as an obstacle to world economic growth and pleaded with other nations to sign multilateral trade agreements and reduce trade barriers. It is a major elevation for India since it has been perceived as a new leader in the global scene for commerce along with China and Canada. After coming to power, PM Modi has undertaken major structural reforms in currency, tax brackets (such as demonetization and Goods and Service Tax), bankruptcy codes, and real estate regulation. Furthermore, he has put in significant efforts to usher the digital age to Indian bureaucracy. Through this eloquent pitching at WEF plenary session, Modi enhanced his reputation as a global statesman and put the spotlight on India as a transformed, market-efficient economy.
Day Two: Germany, Italy, and France: “We believe that isolation won’t help us.”
The second day was dominated by the Europeans. The leaders of its three biggest economies- Germany, Italy and France asked other countries to learn from the mistakes of the past- “We believe that isolation won’t help us. We believe we need to cooperate, that protectionism is not the answer,” Angela Merkel, the German chancellor, said, asking: “Have we really learned from history, or haven’t we?” French President Emmanuel Macron echoed similar views: “it was incumbent on his leadership to build a France that was “prosperous and open to the world” and to make sure people “weren’t left behind” by globalization”. Despite political setbacks in Germany and Britain, the confidence expressed in such statements would continue, as restated by Italian Prime Minister Paolo Gentiloni who believes populist sentiments would not prevail over structural economic reforms. These leaders expected the European recovery to continue through 2018, but it would depend on the extent of political instability in major economies to determine the success of these recovery policies.
Day Three: Focusing on AI– It would augment human life instead of taking our jobs
The third day was devoted to several other issues including woman rights, child abuse, climate change, improved healthcare and cybersecurity. Artificial Intelligence (AI) is the new buzzword that everyone is hooked to irrespective of whether you are an economist, politician, businessman, academician or a journalist. In economic terms, AI is said to be the medium to power a whole range of other industries as diverse as autonomous vehicles, smart cities, healthcare, manufacturing and financial services. The common view from WEF is that AI is here to stay and would augment human life instead of taking their jobs. It is important to change the mindset of people to accept this change and not the skill set. “Any time you work with technology, you need to learn to harness the benefits while minimizing the downsides”, said Sundar Pichai, the CEO of Google, who believes that AI will be the most important invention of mankind. It is interesting to notice that while developing countries like China and India are calling for investments in manual labor, they are also backing huge amounts of money into technologies which make the best use of AI, a field where America isn’t ready to let go of its dominance.
Day Four: Trump: “America is still open for business.”
Speaking of USA, on the final day of the conference, President Donald Trump, as usual, had the last word. Given the honor of making the closing address, Trump attempted to find the balance between ‘America First’ and ‘American Alone’ The President harped on the statement that ‘America is still open for business’. He continued to espouse fair economic competition and trade but he wanted these relationships with other countries to be reciprocal. Other takeaways from his speech include: the reduction in corporate taxes would generate billions of dollars in new investments and jobs; the call for employment among all American communities; citing the low wages among African Americans; his threat to pull the US out of all trade deals and the absence of combative nationalism he is famous for.
The World Economic Conference is pertinent in today’s economic world: it gives voice to the heads of the developed and developing nations. It is a place to build mutually beneficial relationships and synchronize national policies for vested interests. These meetings might not belt out immediate results, but the talks do sow the seeds for better and permanent solutions for those challenges faced by the world, in years to come. And it’s not just economic problems: the WEF continues to deliberate on technological and social issues such as AI, climate change, racial equality and women rights. “To its advocates, the WEF doesn’t save the world, rather it helps influential and intelligent people of good intent devise solutions to the world’s intractable social, economic and political problems”.
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