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World Economic Forum Annual Meeting 2011: Shared Norms For The New Reality
World Economic Forum Annual Meeting 2011: Shared Norms For The New Reality
World Economic Forum Annual Meeting 2011: Shared Norms For The New Reality
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Highlights, webcasts and summaries are at: Responding to the New Reality page 14
http://wef.ch/davos
The Economic Outlook and Defining Policies for Inclusive Growth page 18
Hundreds of pictures from the Annual Meeting
photographed by Swiss-Image are available at: Supporting the G20 Agenda page 22
http://wef.ch/pix
Building a Risk Response Network page 26
Acknowledgements page 30
Preface
Klaus Schwab
Executive Chairman, World Economic Forum
The first Annual Meeting of the second A background of civil unrest in Tunisia independently, impartially and
decade of the 21st century opened and Egypt provided a poignant internationally, and committed to
amid an atmosphere of micro- example of the nature of the new improving the state of the world. The
optimism combined with macro- reality. Events across the Middle East World Economic Forum acts as a true
pessimism. Members of our graphically demonstrated the global trustee, always beginning with
communities were looking out on a complexity, rapidity and the long-term global public interest in
world full of opportunity for themselves interconnectivity of the world today. mind and at heart, not the self-interest
and their networks. At the same time, Global youth is rising to the challenge of any single stakeholder.
when confronted with the challenges of leadership in the 21st century using
facing the world – from the stress on new technologies and ways of It is in that spirit that the Forum
water, food and energy created by a communicating. New actors are launched the Risk Response Network,
ballooning global population to the emerging and influencing global events a collaborative, networked entity
complexities of the post-crisis financial in unanticipated ways. designed to enable the world to
environment and the new realities of prepare and respond to global risks, a
the post-globalization, post-privacy, All these dimensions of the new reality new type of organization designed for
post-digitization world – there was a require first and foremost a common the new reality.
feeling of being overwhelmed and approach: basic values and shared
burned out. norms to be turned into positive forces The Risk Response Network, as with
driving our future. It also requires a everything we do, will build on our four
Nonetheless, throughout the Meeting, new sense of “global togetherness”. strategic pillars: Communities,
optimism was the dominant force. The Events in the wider world as well as Interaction, Insight and Impact. These
spirit of Davos always provides a the discussions in Davos served to provide the Forum with a rigorous and
platform for unique interaction, but this reinforce the importance of the unique framework and ensure that
year reinforced its position as the Meeting’s theme and sub-themes, everything we do throughout the year
Summit of Summits. The Annual each of which is explored in depth in achieves the excellence apparent at
Meeting provided an opportunity for this report. the Annual Meeting.
leaders of the G20 nations to meet in
The impact of Davos for 2011 is to
an informal setting to open the Importantly, the discussions under
begin the year with active optimism,
discussions that will be continued these themes, the insight and
Paul Bulcke, Chief Executive Officer, Nestlé, Switzerland introducing new thinking, new
under the chairmanship of France conclusions that emerged from them
connections, new ideas and networks
through 2011. The presence of many underline the unique nature of the
Chanda Kochhar, Managing Director and Chief Executive Officer, ICICI Bank, India to build on the micro-opportunities to
European leaders reinforcing their World Economic Forum as a truly
contribute to the Forum’s mission to
support for the continent’s single multistakeholder institution. In these
Yorihiko Kojima, Chairman of the Board, Mitsubishi Corporation, Japan improve the state of the world.
currency (see Euro Leadership, page complex and fast-moving times, the
10) calmed markets and provided world needs an institution that is able
Ellen Kullman, Chair of the Board and Chief Executive Officer, DuPont, USA confidence that the political to address global challenges in an
environment around the euro would interdependent, proactive and
Jacob Wallenberg, Chairman, Investor, Sweden provide stability. collaborative way, acting
Wei Jiafu, Group President and Chief Executive Officer, China Ocean Shipping Group Co., People's Republic of China
Addressing the participants of the World Economic Forum Many problems Europe faces follow decisions governments
Annual Meeting 2011, President Nicolas Sarkozy of France have taken, alone or together, United Kingdom Prime Minister
framed his vision for the G20 by noting, “We are 11 years into David Cameron told participants. On the future of Europe, he
the 21st century, yet we are still functioning with the rules of said: “We are an open, trading continent. We have a proud
the 20th century.” We have entered an age where it is ever record of invention. We’ve got advanced democratic values.
Inflection to Recovery Downside Risk more important to talk and listen to each other, to identify the But yes, we’ve got to recognize that Europe has to earn its
collective common interest and to find news ways of thinking way. The world doesn’t owe us a living. So let’s make the
The world is at a turning point and dialogue among leaders The “new normal” for the developed economies looks bleak, to help us build the future. choice to do things differently, to fight for our prosperity.”
from all sectors is imperative to forge a sustainable future, according to panellists in a debate hosted by Time magazine,
agreed the Co-Chairs of the World Economic Forum Annual which included Nouriel Roubini, Professor of Economics at Over the past 18 months, at the brink of the precipice, there Cameron outlined his vision of a new direction for the
Meeting 2011. New York University; Sir Martin Sorrell, Chief Executive Officer was little choice behind the decisions made by the G20; it is continent: a risk-taking investment culture, a Europe-wide
of WPP; and Min Zhu, Special Adviser to the International now time to keep cool heads as the decisions get tougher. patent scheme, tougher stress tests, killing off sovereign debt
“The new reality is an acceleration of globalization,” said Monetary Fund. The panel predicted that growth in most The G20 must be productive, and its agenda will focus on and removing crushing regulation are a formula for growth.
Jacob Wallenberg, Chairman of Investor, Sweden. To keep advanced economies will remain below trend with outright three major risks: sovereign debt, monetary and financial “Now is the time to go for a genuine single market,” he said,
pace with emerging challenges, “we need to see more contraction in parts, prospects hindered by a lack of imbalance, and the impact of inflation on growth and the pointing to commitments from leaders across Europe to open
collaboration and dialogue between different stakeholders, international cooperation on key issues and the ability of the soaring price of commodities. and free market reform.
which is what Davos is all about,” he added. US to tackle its budget deficit – the “real gorilla in the room”.
When asked by Klaus Schwab, Founder and Executive
“We didn’t fall off the cliff, and there is growth worldwide,” Chairman of the World Economic Forum, whether the euro
said Paul Bulcke, Chief Executive Officer, Nestlé, Switzerland. has the capacity to survive, President Sarkozy said that, for
the 17 member countries, the euro is a magnificent symbol of
“The economy is on a clear track of recovery,” agreed Wei lasting peace. There is a need to deepen and integrate the
Jiafu, Group President and Chief Executive Officer, China defence of the euro and never turn away from it.
Ocean Shipping Group Co., People’s Republic of China.
Sustainable Future
Debt and Unemployment
President Susilo Bambang Yudhoyono of Indonesia set out
The global economy faces many challenges, not least the his vision for “sustainable and balanced” growth in the 21st
burden of sovereign debt, concluded a panel in Davos, which century. The 2011 ASEAN Chair told participants in a plenary
included McKinsey Managing Director Dominic Barton and address that “the world is undergoing major shifts.” He
Modernizing Russia James Dimon, Chief Executive Officer of JPMorgan Chase. outlined three new realities: the rise of emerging economies;
Population growth and rapid urbanization in the developing Eternal Vigilance the imperative for peace and security; and climate change,
In his opening address, President Dmitry Medvedev of the world risk depleting natural resources. In the West, job losses which underscores the need for a new low-carbon economy.
Russian Federation referred to the difficulties facing Russia in and wage deflation threaten social stability, as does the Federal Chancellor of Germany Angela Merkel warned He urged leaders to foster a “21st century globalism which
building the rule of law. Addressing overseas investors, growing spectre of youth unemployment. Dimon said criticism participants against complacency about the risks of a further should do away with dogmatism.”
Medvedev said decision-makers in Russia are not immune to of banks is misplaced. “There is good and bad in banking just financial crisis, saying that all the international mechanisms
ordinary mistakes, but “major changes” are taking place, as there is in the media sector.” needed to prevent another crash are not yet in place. “Can
particularly in fighting corruption and modernizing the we safely say that we can prevent further crises from
judiciary. “Realistic attempts are being made to improve the happening? Do we have the necessary mechanisms in place
investment climate in Russia. We have not yet achieved to ensure sustainable growth globally? We have laid down the
outstanding results, but we have resolved to persevere. We groundwork, but we are not there yet,” Merkel added.
are learning and ready to receive constructive advice, but we
do not need lecturing,” he added.
4 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 5
Building Bonds Health for the 21st Century Social Contract Towards National Reconciliation
Japan’s Prime Minister Naoto Kan told participants that it is “Chronic disease causes six out of every 10 deaths Governments and businesses should start revising their social In a taped audio speech from her country, Aung San Suu Kyi,
essential to reconnect and forge new relationships. “Spiritually worldwide,” said Secretary-General Ban Ki-moon of the contracts with their stakeholders in light of the new realities of General Secretary of the National League for Democracy
and economically … it’s important for us to open ourselves United Nations. It is no longer just a rich man’s problem; the post-crisis world. “The new contract has to move beyond (NLD), called on world leaders gathered in Davos “to use their
up to the rest of the world.” This is equally true on a domestic more than 80% of these deaths occur in developing the rulers and the ruled,” said Prime Minister Abhisit Vejjajiva particular opportunities and skills as far as possible to
as well as an international scale, he said. Kan added that he countries. However, only 3% of development assistance goes of Thailand. “We’re all partners now.” The state should not promote national reconciliation, genuine democratization,
had come to Davos to discuss social inclusion and the to chronic diseases. “To fix the priorities, we must place non- intervene in the private sector, he declared, but should focus human development and economic growth in Burma, that our
concept of human security. To him, building new bonds and communicable disease high on the development agenda.” instead on creating the conditions that would allow people may in turn be able make their own contribution
opening up to the world are at the heart of that push. “Today, companies to create employment and make profits for their towards a safer, happier world.”
the world faces major changes that can be likened to a Executives from the food and pharmaceutical industry – shareholders.
tectonic shift, both in national security and in economic Richard Clark, Chairman of Merck, and Kendall Powell,
fields,” stated Kan. “I think we need to build new bonds Chairman and Chief Executive Officer of General Mills –
suitable to the times and regions we are living in,” he said. committed to closer collaboration with government and non-
governmental organizations.
The Bill & Melinda Gates Foundation has added US$ 100
million to the campaign to wipe out polio and a further US$
60 million was pledged by United Kingdom Prime Minister Responsible Business Hope for Haiti
G2 Collaboration David Cameron, who committed to double his country’s
current contribution to polio eradication. “This funding will see Business people should be sent back to school so they can The best way to help Haiti in its post-disaster recovery is to
The world’s largest economies need to collaborate to face the an extra 45 million children fully vaccinated against the be re-educated to think beyond short-term profit-making, build back better. An IdeasLab session on Haiti at the World
challenges of the new reality, said US Treasury Secretary disease,” he said, urging other world leaders to finish the job, PepsiCo Chairman and Chief Executive Officer Indra Nooyi Economic Forum Annual Meeting 2011 focused on five key
Timothy Geithner, speaking at a plenary session. The effort is adding that the new funding is conditional on matching said in a plenary session. Management success has been points: meeting the essential need for pathogen-free water;
needed to transform the post-war economic deal. With a commitments and making vaccines routine in affected defined narrowly as maximizing profits for shareholders supporting small and medium size enterprises and providing
view to the pivotal relationship between the US and China, countries. without consideration of long-term goals such as micro-insurance to protect the poorest Haitians, particularly
Geithner described the interests on both sides as closely tied sustainability. The corporate mindset still regards adopting women; providing sustainable construction and skills training
in many ways. sustainability as a matter of resolving conflicts or trade-offs. to ensure improved building standards and quality in future;
Nooyi declared, “We believe that short-term profits and long- employing mobile banking as a tool for financial inclusion; and
On the 10th anniversary of China’s accession to the World term sustainability are not mutually exclusive.” jump-starting the Haitian economy through social business.
Trade Organization, Chen Deming, Minister of Commerce, The Forum also launched its new report Private Sector
People's Republic of China reaffirmed his commitment to free Development in Haiti: Opportunities for Investment, Job
trade and reminded participants of the significance of China’s Creation and Growth.
role in global trade.
6 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 7
New Energy Risk Response
“Developing new sources of renewable energy is an amazing The World Economic Forum launched the Risk Response
business opportunity and key to achieving sustainable Network (RRN) to bring together stakeholders on complex,
economic growth,” said Mexican President Felipe Calderón interconnected global risks. The world has fundamentally
as he addressed a panel. Other panel members included changed and this new reality calls for more foresight and
United Nations Secretary-General Ban Ki-moon, Indonesian collective action. The network serves as a preparatory,
President Susilo Bambang Yudhoyono and Bill Gates, Co- analytical and highly practical framework for the global
Chair of the Bill & Melinda Gates Foundation. community to improve risk management through bringing
together the most relevant global decision-makers with the
most compelling insights and the most suitable tools and
services.
India Inclusive
8 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 9
“The euro delivered what had been asked of it, namely price
Euro stability.”
Jean-Claude Trichet
Leadership
President, European Central Bank
Nick Clegg
Deputy Prime Minister of the United Kingdom
10 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 11
Upbeat. Optimistic. Positive. These These issues and their consequences are of time in Davos finding and cultivating
were the words that described the exacerbated by the new world of these real solutions and relatively less
Shared Norms for the New Reality mood of participants gathering in information, social networks and hyper- discussing the adequacy and design of
Davos for the World Economic Forum connectivity. The glut of information is not global governance frameworks.
Annual Meeting 2011, despite a only driving transparency and
complex and often troubling collaboration, but it is also causing a new The only certainty is that crises will
economic, social and governance wave of problems, centred on corporate continue to spark. Against the backdrop of
landscape around the globe. and individual privacy, social upheaval, the new reality, as leaders work together to
transparency, corruption and security. The develop shared norms, the World
Growth has returned to the global disenfranchised are finding a voice, and Economic Forum has launched a new
economy, and leaders were beginning to traditional economic, social and corporate network designed to create a more resilient
discern the shape of the new reality. They norms are being shaken by the radical world to help turn the best ideas and
were not entirely uncomfortable with what disruption driven by global collaboration of insights into policies and action: the Risk
they were discovering. like-minded communities and Response Network (RRN). Building on its
campaigners. existing insight generation and networks,
An often surprising level of economic such as the Global Agenda Councils, the
optimism was driven primarily by what Never have governments, organizations Centre for Global Competitiveness and the
might be termed survivor’s confidence. In and individuals been more exposed – the Global Risks report, the RRN is a platform
the words of one Co-Chair: “We didn’t fall social Web and real-time, complete to provide the most relevant global
off the cliff, and there is growth information is shining a light on the decision-makers with the most compelling
worldwide.” externalities arising from corporate and insights and the most suitable tools and
governmental activities. The answer, as services. It is intended to build on the
Emerging market economies, particularly implied by the Annual Meeting’s theme, is Forum’s unique position between the world
China and India, are growing strongly and the development and dissemination of of dialogue/insight and the world of action.
parts of the developed world – notably the shared norms of behaviour across
US and Germany – have also recovered, organizations, disciplines and arenas. The new reality is a new world of risk.
although not as resiliently. Many Globalization, shifting demographics,
corporations have seen profits rebound to The consensus of participants is that the rapidly accelerating technological change,
pre-crisis levels much earlier than new reality demands a new type of leader increased connectivity, economic
expected. After a year of debt crises in – he or she needs to possess not only uncertainty, a growing multiplicity of actors
Europe and mixed news about the quality traditional leadership qualities – firm, smart, and shifting power structures combine to
of the US recovery, the consensus was directed – but also must be make operating in this world
that the worst is over. compassionate, understanding, unprecedentedly complex and challenging
empathetic, open and transparent. This for corporations, institutions and countries
Yet, optimistic economic discussions were new kind of leadership is to be exercised in alike. Yet, leaders brought with them
set against the backdrop of violent unrest a world of ever multiplying challenge, preparedness and willingness to engage in
in Tunisia and Egypt. These protests characterized by trends such as the a complex future, and it is this
spread across the region enabled by a shifting of economic and political power preparedness that provided the fuel for the
relentlessly connected world. Contagious from West to East; a burgeoning global optimism which drove the Meeting.
civil unrest emphasized several underlying population expected to hit some 9.1 billion
themes of the new reality: the importance by 2050, putting immense pressure on the
of inclusive growth and the political impact water-food-energy-nexus nexus that
of disenfranchisement; the failure of global provides humanity with its sustenance;
governance frameworks; and the manifold ageing populations in the developed
effects of hyper-connectivity, social countries; new digitally driven behaviours
networks and information overload on among increasingly confident, well-
governance – corporate, national and educated, yet disenchanted, youth
global. populations; and the agglomeration of
complex, interconnected risks that
From the first session in the Annual combine to create crises that are
Meeting, the outlook for the global increasingly severe and global in
economy was discussed in the context of consequence.
stark inequality in outlook and prospects
within and between countries, and the Leaders and organizations in this new “One has to take into account
imperative to find new paths to inclusive reality need to be both global in their
not just injustice within a
growth. Political upheavals in the Middle outlook and pragmatic in their approach to
East underscored how urgent it is for the finding and implementing solutions. There
country or between countries,
international community to focus on is growing recognition that workable but for mankind in its entirety.”
unemployment, particularly among youth solutions to 21st century problems will not
and the long-term jobless – the losers of necessarily be grand designs, conceived Micheline Calmy-Rey, President of the
globalization. Addressing inequalities that on a global scale, but practical innovations Swiss Confederation and Federal Councillor of
have been fully exposed by the global that work in villages, towns, cities and
Foreign Affairs of the Swiss Confederation
recession is the paramount post-crisis regions, scaled up or adapted to different
challenge for governments, business and situations. Participants spent a great deal
civil society around the globe.
12 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 13
• The new reality is born of a hyper-connected world with multiple power centres,
Responding to the New Reality characterized by volatility and high-speed change.
• Disruptive demographic trends such as an ageing and growing population,
coupled with changing social behaviours of the millennial generation are exerting
growing pressure on governance.
• A sustainability imperative has emerged, caused by growing social and corporate
awareness of scarcity in commodities and natural resources.
• New social and environmental demands (governance) on, and expectations (from
society) of, business exist.
Source: Economist Intelligence Unit Index of Democracy 2008; Institute for Democracy and Electoral Assistance
14 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 15
organizations. To truly harness what this Humanity must take its rightful place in
empowered youth can deliver, there needs Global opinion: Capitalism's flaws need addressing business across cultures, with leaders Broadband access is only going one way
to be a concrete corporate response – embracing the softer skills of management
develop creative workspaces, introduce Capitalism... such as mindful leadership, true empathy,
100% ...works
flexible hours, reward career paths that 16% 8% 25% 13% 6% 23% 8% 11% 13% 8% 2% 6% optimism and selflessness, along with a 25
best as is Developed
involve constant growth and sell the vision passion for collaboration – facilitated, as it
Percentage of respondents
ce
es l
ia
na
il
co
ia
K
tri ba
az
an
di
pa
es
ss
5
an
hi
i
)
Developing
ex
un lo
In
Br
m
Ja
Ru
n
C
the personal computer has connected the urgently needed in thinking and policy to
co G
Fr
do
M
er
G
In
developed world, but for the developing bring about sustainable growth, protect
7
Attitude towards free market capitalism
(2
It works well and increased regulation will make it less efficient
world connectivity comes from mobile It has problems that can be addressed through regulation and reform resources and raise living standards. 0
It is fatally flawed and a different economic system is needed 2005 2006 2007 2008 2009 2010E
technologies. Those individuals will eventually want the
Note: White spaces represent "DK/NA", "Not sure" and "Depends" trappings of everyday life and the world is
An Ageing Population not able to sustain them.
Source: BBC GlobeScan/PIPA (November 2009) Source: ITU (2010)
Countering this swelling of youth is the Many consumers do not believe that
looming impact of the ageing global leveraged for the benefit of society as a Today’s leader must recognize that a resource conservation can wait for into supply chains. However they achieve
population. The main challenge is not the whole. changing world necessitates changes in legislative impetus, and they are putting it, today’s business leaders need to deliver
ageing population, but the risk of a failure corporate structure and governance – the pressure on organizations to innovate. concrete, transparent solutions to building
to adapt to it and a failure to recognize the A New Model for Leadership “humanity of business” must be Ground-up pressure from consumers – sustainable enterprise.
aggregated value of older people. systemized; there is a need for rather than legislation or protocols – is
In the face of these changes, there are two “compassionate capitalism” that becoming a forceful reality. In response, In today’s hyper-connected world, it is not
Adaptation means supporting, core imperatives for today’s leaders: recognizes shared value and aligns some corporations are choosing to partner enough for organizations to act responsibly
accommodating and empowering older creating and managing a response tied to business progress with that of society. with NGOs or raise the bar on their – they need to be seen to act responsibly
people – through technology in the home the notion of the humanity of business, Leaders must translate social values into sustainability credentials; many are and to measure and report on their
and the workplace, flatter pay structures, coupled with practising truly enlightened accepted norms and migrate them into integrating sustainability more holistically performance.
rethinking the concept of retirement (a management. Both are a challenge for the concrete organizational solutions – they
post-industrialization anathema in conventional leader in a world where need to lead from the front, to
countries such as China and Japan) and decisions made correctly today can fail demonstrate and embody the values.
advances in medicine and healthy living tomorrow, and connectivity brings with it a
programmes. Altering society’s view of shift from considered decision-making to As well as this top-down imperative, there
ageing will propagate opportunities for real-time management. is concurrent bottom-up pressure for
“demographic alchemy”, ensuring that the leaders to collaborate and consult, driven
skills and knowledge of the elderly are by social media and crowdsourcing.
16 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 17
• The outlook for the global economy this year is generally benign, though significant
The Economic Outlook and downside risks exist, including mounting debt and persistent high unemployment.
• The multi-speed world economy makes multilateral collaboration to address
Defining Policies for Inclusive Growth •
challenges such as global economic imbalances and climate change more difficult.
Tackling inequality is the paramount challenge for all stakeholders in both
developing and developed economies.
• A new social contract has to emerge in which governments, business and citizens
work together to create shared value. Citizens can no longer be entitled
bystanders.
Source: IMF World Economic Outlook (October 2010); PwC forecasts (January 2011)
18 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 19
While the US and China must logically Governments must focus on creating
work together to balance their economies, opportunities. The state not only has to Emerging markets: Driving growth
with China’s growth at around 10% and promote the conditions for prosperity in
US unemployment at about the same rate, the economy and deal with the most
10%
Forecast
cooperation is politically difficult. disadvantaged in society but must also
Presidential elections in the US and the ensure that investment is made in
12
10
Africa
Unemployment rate
Europe
North America
8 Latin America
MENA “I call Cancun a big step for the
6 community of nations. But
4
Asia-Pacific unfortunately, it’s also at the
same time a very small step for
2 the planet.”
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F Christiana Figueres, Executive Secretary,
United Nations Framework Convention on
Note: Data not available for all countries. Africa aggregate includes 7 nations; Asia excludes India and rural China.
Climate Change (UNFCCC), Bonn
Source: IMF World Economic Outlook (October 2010)
20 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 21
• The G20 was instrumental in averting worldwide depression at the height of the
Supporting the G20 Agenda crisis.
• Some analysts see a world of “G-Zero”, meaning disarray in global governance
where there is no leadership. Such a world could lead to a crippling wave of
protectionism.
• Consistency in regulations, tax systems and tariffs along with greater transparency
are essential for a level playing field.
• The G20 can coordinate an international agreement to get the mix of market
regulation and entrepreneurial flexibility right for economic expansion. It is the only
game in town.
In the months following the financial The effect of these conflicting objectives,
crisis, the G20 was filled with as played out in the G20, was indecision,
enthusiasm for engaging in urgently verging on paralysis.
needed structural reform. There was
general recognition that once a Now What?
worldwide banking crisis had been
averted, currency exchange rate Throughout the World Economic Forum
imbalances needed to be corrected Annual Meeting 2011 in Davos, there was
and a long list of structural reforms general acknowledgement of the G20’s
needed to be put in place. role in averting a worldwide depression at
the height of the crisis, but also a lack of
Despite the best intentions, it did not clarity about the group’s future and openly
happen. A precipitous drop in the bond expressed doubts about its ability to
market shifted the focus to austerity deliver.
programmes and attention on the
enormous deficits created by the stimulus One of the new buzzwords proclaimed
programmes. The shift in emphasis led to provocatively at this year’s Annual Meeting
contradictory objectives: the finance was “G-Zero”, the suggestion that disarray
ministers and central bank governors from in global governance is creating a new
the 19 countries and the European Union world in which there effectively is no
that make up the G20 wanted to continue leadership at all.
to stimulate economic growth and to
tackle the glaring trade imbalances and The danger in allowing that situation to
dangerously high levels of unemployment continue is that without an effective means “Now that we feel that the crisis
in certain countries but, at the same time, of coordination, the world could easily slip is not something that dominates
growing panic over skyrocketing deficits into a new crippling wave of protectionism. the headlines every day, we run
and an accompanying infatuation with That scenario, pushed to the extreme,
the very real risk that – also
austerity threatened to slow the recovery could easily result in a worldwide
that the stimulus packages were intended recession, or worse, the depression that among members of the G20 –
to support. the G20’s earlier efforts had managed to there is perhaps less of an
effort, less of a sense of
urgency. And that, I think, is
OECD countries have built debt mountains exactly the danger. We need to
work against this.”
80%
40
30
20
10
-10
Norway
Switzerland
Sweden
Korea
Luxembourg
Poland
Austria
New Zealand
Slovak Rep.
Belgium
Germany
Czech Rep.
Hungary
Finland
Canada
Italy
France
Netherlands
Total OECD
Portugal
Greece
Spain
US
Japan
UK
Iceland
Ireland
Australia
Denmark
Note: Total OECD is a weighted average.
22 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 23
avoid. At the very least, the new emphasis
on austerity promises to slow growth and China and the middle east dominate sovereign investment
increase the difficulty of securing structural
reform. Others
China
A more cynical suggestion is that the most
realistic rearrangement of power is likely to Russia
be a de facto G2, in which the US and
China divide up the world in a new
Kuwait
superpower rivalry. But the G2 is as
problematic as the G-Zero approach.
China and the US are hardly alone in “Our first priority must be to kill
determining the new geopolitical Singapore
off the spectre of massive
equilibrium. France, the United Kingdom
and Russia are formidable nuclear powers.
sovereign debts. Those who
United Arab Emirates
India, Pakistan, Israel and, eventually, Iran argue that dealing with our
are emerging nuclear powers. Europe may deficit and promoting growth
Saudi Arabia
appear to be internally divided, but the are somehow alternatives are
Eurozone now represents a market of 331 Norway
wrong. You cannot put off the
million highly educated and relatively
Source: IFSL (2010)
first in order to promote the
wealthy consumers.
second.”
Much of the frustration with the G20 In today’s globalized marketplace, even
The sheer size and economic power of the comes from misplaced expectations that small and medium-sized enterprises
European Union makes it a formidable the group can act as a kind of global increasingly depend on exporting to global David Cameron, Prime Minister of the United
force in setting standards for the rest of government, imposing a universal set of markets. For the global economy to move Kingdom
the world. The bottom line is that, at least policies that will make the world work forward, consistency in regulations, tax
in economic terms, the new direction for better. That is not likely to happen anytime systems and tariffs, and greater
global politics is likely to be one of soon. Instead, the G20’s main value is to transparency are essential to create the
multipolar, geopolitical alliances rather than act as a global discussion group that level playing field that is a prerequisite for
superpower rivalry. enables the major economic players to developing effective business strategies.
understand the impact of various issues on The world needs a body that can
The Only Game in Town each country. effectively make this happen.
The G20 was created in 1999, as Imperfect as it is, there was a strong A number of panellists noted that a large
recognition that the ongoing transfer of feeling at the Annual Meeting this year that proportion of those companies that
economic power to emerging markets had the G20 is the only game in town. In one survived the crisis are leaner and in better
created a new reality which meant that of the 2011 discussions dealing with the shape than they were before. Many are
effective economic coordination needed to importance of the G20, a panellist asked in sitting on large reserves of cash but are
be expanded beyond the OECD countries. exasperation: “What else do we have? hesitant to invest in their own expansion
The last decade has confirmed this. Yet, Does anyone really want to go back to the and job creation because of uncertainty
the G20 is an imperfect body for dealing G8?” about the regulatory landscape of the
with complex global issues. future. Lack of clarity is hampering
economic expansion and the creation of
new jobs. As the head of a leading US
investment bank put it, the international
Emerging markets are claiming their share of investment
regulatory framework, in spite of Basel III,
100%
is now so complex that no one can really
Select understand it. A concern forcefully
emerging
(US$ millions, current prices and exchange rates)
* Argentina, Brazil, India, Indonesia, Korea, Nigeria, Russia, South Africa and Vietnam
24 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 25
triumphs of the technology revolution.
• The new risks landscape is typified by tightly interconnected sets of shocks which Such positive shocks will be a key feature
Building a Risk Response Network are truly global, even if their impacts differ at the local level. The world is of the new reality.
increasingly volatile and vulnerable while being less risk-resilient.
• The rise of a multipolar world exacerbates the shortcomings of existing Global Governance Gap
cooperation mechanisms and the ability to respond collectively to risk in the
absence of a centralized agency. One of the defining features of the new
• The World Economic Forum launched the Risk Response Network (RRN) at its reality is global interdependency. It is
Annual Meeting 2011. impossible for any stakeholder to address
• The RRN will serve as a preparatory, analytical and practical network to better major challenges in isolation. At the same
understand, manage and respond to the new risk landscape. time, as discussion on the G20 and global
governance made clear, there is no
centralized watchdog, agency or authority
The 2011 global risks landscape is as “virtual” world. It is heavily enmeshed as to collectively respond to risk; coordination
crowded as ever, with a dizzying array part of the real world, diffusing power and is typically ad hoc and fragmented.
of risks and opportunities. amplifying the worst-case and best-case
scenarios. The transition to a multipolar world is
Several new risk realities stand out. complicating matters. Power is shifting not
Amid this sober assessment, participants only to the emerging world (away from the
First, there is heightened recognition that were urged not to forget the upside West) but also to global, non-governmental
global risks, like the world, are now tightly surprises – so called “white swans” – such organizations and transnational
interconnected and shocks become global as the reunification of Germany and the corporations with widely divergent
much quicker than in the past. This dismantling of apartheid in South Africa in interests. It is a paradox: conditions that
“globalization of risk” ran like a red thread 1990, as well as the green revolution and make improved global risk response so
through discussions in the Annual Meeting.
Risks, like manufactured goods, can no
longer be labelled simply “Made in Japan”
or “Made in USA”. They are “Made in the
World”.
26 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 27
Forum launched the Risk Response
Network (RRN) at the Annual Meeting Natural and man made catastrophes are increasing
2011. The RRN will link:
28 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 29
Acknowledgements
The World Economic Forum would like to thank its Strategic Partners for their valuable support.
30 | World Economic Forum Annual Meeting 2011 World Economic Forum Annual Meeting 2011 | 31
Contributors
The programme team: Anne-Sophie Duprat, Antonio Calvosa, Begona Martinez, Emma Loades,
Eva Trujillo-Herrera, Jaclyn Asuncion, Jessica Dyllick, Johanna Dousse, Mireille Bertolini, Natalie Hendro, Nathalie Chalmers,
Nicolas Ruble, Rebecca Ivey, Sebastian Buckup, Stéphanie Nassenstein-Zacchi, Tiffany West and Xiuying Zhang
Report Writers: William Dowell, Gay Flashman, Alejandro Reyes, Gareth Shepherd
Design and Layout: Kamal Kimaoui, Associate Director, Head of Production and Design
Special thanks to PwC for their help in preparing data and statistics for the World Economic Forum Annual Meeting.
The majority of sessions held at the Annual Meeting are available in summary form at:
http://www.weforum.org/events/world-economic-forum-annual-meeting-2011/index.htm