The World Economic Forum works towards building a world-class corporate governance system through its motto “entrepreneurship in the global public interest”. The forum believes that social development and economic progress go hand in hand in hand and hence depend on each other.
The Annual Meeting 2010 of the World Economic Forum just ended in Davos, Switzerland; this meeting had special importance given the gloom in the global economy. While everyone agreed that the effort for a better future has to be a collaborative effort, let’s understand the key issues discussed at this meeting.
Globalization originally meant corporations going abroad and helping the local economies their grow through value addition provided, but the price wars that resulted from globalization basically resulted in lessening share of local companies and sometimes these companies even got wiped off. This eventually resulted in change in the employment scenario there. In the globalization race only present mattered, future did not matter and the value system was skewed. We need to understand that Globalization is meant to bring a conducive growth of global societies; in the financial crisis we realized that while globalizing, enterprises exploited the imbalance between various economies, which may not be a good idea considering the social responsibility that all corporations owe.
Another aspect to this, today the emerging economies which were export oriented are trying to concentrate on their local consumption whereas the developed nations are trying to slower their consumption to beat the recession, but if this goes on for long it would be no good for the global economies. To take one step further, post crisis if the developed world takes a protectionist outlook for say movement of services from developing nations to them, than the developing nations would easily take a counter action for movement of products to them. We should understand that post-crisis power blocks would be different; the developing nations can easily leverage their power with the vast customer base on their side. However with a multi-polar existence of powers, uncertainties and volatilities would also increase.
With this in mind the Leaders of today should act as trustees of long term prosperity of societies and not just by short term benefits, they should be able to enable co-ordination between economies. We need a new global economic model – the rules of 21st century need to be different. These rules need to be simple and both the governments and private sector should understand that they together can contribute better for the wellbeing of the society rather than going alone. New relations need to be established between these entities, Public-Private partnership is the way to go ahead. Josef Ackermann, CEO Deutsche Bank put forth an excellent proposal to create a B20 forum, where business representatives from member nations come together and collaborate for the betterment of global economies. Last but not the least, come what may immediate Action is required, actions matter more than ever today.
Mr Larry Summers, key economic advisor to Mr Obama commented on the current economic state of US as Statistical recovery and a Human Recession. We should truly understand that employment is going to be one of the key issues in this crisis, so creating jobs is going to be the foremost task for the government’s world over.
One of the views on this is, encourage Entrepreneurship; Ventures are essential for growth, encourage entrepreneurs to take risks, they in turn would recruit people and fuel the growth. We cannot play very safe in the financial markets because it would bring in its own tradeoff such as credit becoming costly and in turn spending going down.
Mr Azim Premji, chairman Wipro Technologies rightly suggested that, we should not rely only on large industries for creation of employment, small scale and medium scale industries are also competent enough to create them. He put forth a rationale, that in places like India, youngsters, who drop out of school after 10th Grade schooling are not skilled enough to fit in highly skilled jobs and are highly skilled for jobs such as agriculture, so the issue of harnessing the talent of this population should also be looked after. The idea of introducing course-work in basic trade such as auto mechanics, computer repair etc in high schools to enable these students to make them self-employed, can off course contribute to the alleviation of this issue. Adding to this point I think in places such as India we really also need to create a shift in mentality to make people understand that no job is small and that every job is at par.
I understood Patricia Woertz’s, CEO of Archer Daniels Midland point of the importance of agriculture and the suggested reforms that should take place to fuel growth in Agriculture and in turn employment. However with more people moving out of Agriculture as an employment source, I doubt how much we can contribute to the employment issue at this moment by concentrating on this aspect. Ronald Williams, Chairman Aetna Inc talked about the importance of healthcare sector in a better tomorrow and employment as well; I agree with him on the issue of better tomorrow but every dollar spent in a non R&D business will create more employment than a R&D business, at this critical juncture we need more jobs.
Peter Sands, Chief Executive of Standard Chartered rightly pointed that there was no “one big idea, one silver bullet” that would guarantee recovery. To me what was important that, during this 5 day meeting everyone understood that the societies had lost trust, institutions made mistakes and the issues need to be tackled both technically and morally for a better future, short as well as long term.