Does anyone care about the World Economic Forum in Davos, Switzerland (and should they)?

Does anyone care about the World Economic Forum in Davos, Switzerland (and should they)?

04/02/2013 | FxM – Evan Brock Gray

Background:
The World Economic Forum: Committed to improving the state of the world began in 1971. Its annual meeting in January is based on the idea of the interconnectedness of three fundamental pillars: government, business and civil society. The harmonisation of these three areas is what World Economic Forum (WEF) proponents say move the world´s economy and society in the right direction. The founder of the organisation, Klaus Schwab, believes that the vision of the forum is built on “the principal that economic progress without social development is not sustainable, while social development without economic progress is impossible”. By inviting government, business, academic and social leaders to the forum, the best global, regional, industrial and social agendas can be formulated, debated and set into motion. The theme for the WEF 2013 was `Resilient Dynamism´. In 2012, it was `The Great Transformation: Shaping New Models´. As of 2012, within the WEF there were: 406 employees from at least 56 different countries; offices in Geneva, New York, Japan and China; and just under 950,000 Swiss Francs (766,376 euros) in reserves of foundation capital to be reinvested in the non-profit organisation.

Let´s look at those `leaders´ that are actually invited. According to the WEF web page, there are several types of regular invitees: Strategic partners, Industry partners, WEF 1,000 Foundation Members, Global Growth Companies, Technology Pioneers and others. All of these companies must be driving the world forward. However, the entry limit is quite lofty since, “the typical Member company is a global enterprise with more than $5 billion (3.68 billion euros) in turnover, although it varies by industry and region” The membership fee for the forum´s members is set at 42,500 Swiss Francs (34,285 euros).

The digital news outlet Quartz broke down the aggregate date of the `guest list´. Of the expected 2,630 participants, 680 were CEOs and, surprisingly (or not), only 45 representatives were coming from globally recognised banks. Two-thirds of the likely participants were from Europe and North America, compared to Asians (24%), Africans (4.8%) and South Americans (3.1%) who seemed a bit underrepresented. Of the 300 governmental or bureaucratic representatives, the majority came from the U.S. and Switzerland while the most represented higher-level educational institution was Harvard University. Interestingly, only 17% of the participants were women. This is a curious statistic because one of the permanent areas, or Communities, of the WEF is the “Women Leaders and Gender Parity Programme”.

Themes in 2013
Under the `Resilient Dynamism´ overall theme for the WEF 2013, there were also three sub-themes: `Leading though Adversity´, `Strengthening Societal Resilience´ and `Restoring Economic Dynamism´. However, every year there are five official Issues (Economic Growth, Environmental Sustainability, Financial Systems, Health for All and Social Development) divided into 23 specific areas which are addressed during the five days of speeches, debates, sessions, presentations and special events made by some truly influential and noteworthy world figures.

Many popular themes of today´s world were put into context during the preliminary sessions: Latin America and the BRICs; energy and national resources; global security; social technology; removing risks from Africa; Europe; the Arab World, etc. The first two official addresses to officially open the forum (even though it actually was the second day) were given by the PM of Italy Mario Monti and Christine Legarde, the managing director of the IMF, respectively. Later, science, the global environment, social entrepreneurship and innovation, healthcare and social issues related to education and gender parity were some of the main areas of discussion on the second official day of the forum.

Much attention was given to a little girl from Pakistan, Khadija Niazi, who talked about her experience of taking college-level science courses on two different moocs (Massive Open Online Courses), while the President of Harvard University, Drew Gilpin Faust, also said (in a NY Times article) that education was receiving a lot of interest this year at the forum. This was clearly evidenced in a session on the third official day called The Global Education Imperative, with UN Secretary-General Ban Ki-moon, World Bank President Jim Yong Kim and UN Special Envoy for Global Education Gordon Brown, among others, participating.

The last official day of the forum was finished off with high-level sessions about the global economy and agenda for 2013, entrepreneurship and national innovation and other looks toward the future in different areas. Other notable guests throughout the forum were U.K. PM David Cameron; German Chancellor Angela Merkel; the inventor of the internet Tim Berners-Lee; the new Yahoo CEO Marissa Meyer; the King of Saudi Arabia; the Queen of Jordan; the mayor of London Borris Johnson; Bill Gates, and even actress Charlize Theron came to support global healthcare initiatives.

There´s a myriad of themes, socio-economic areas, famous names, experienced CEOs and advanced minds at the WEF. There is so much going on that most participants say they can get lost easily, they must choose their sessions carefully and they end up missing a lot of important information and insight from `the people who matter most´ in the world economy.

Conclusions and Impact
Most news sources that have taken an interest in the 2013 WEF, along with some of the participants and the founder, remarked that for the first time in years the black clouds of doubt and uncertainty were barely present. This fact is indicative of a positive turn of events for the global economy (barring any major surprises). Why? It is a good sign because the people who attend Davos and other world forums are normally very in tune with the rises and falls of the economy and the markets.

While saying that the “bankers and politicians are warily scanning the horizon for the source of the next crisis – or, for those of a more optimistic turn of mind, a new Big Idea”, Heather Stewart of The Guardian, one of the few journalists to take on the task, summarised some of the key points of the forum, such as: 1) currency wars beginning due to Japan´s turn at quantitative easing while the euro tries not to look expensive; 2) the volatile and controversial practice of fracking for shale gas as a new lost-cost energy source; 3) the upcoming discussion on the U.K.´s Future in the EU; 4) the central banks´ role in creating never-ending uncertainty of when to slow their open monetary policies without disrupting the economic recovery and/or killing the `zombies´ of artificially supported and still problematic banks, business and households they have created; 5) turning the manufacturing and secondary sectors around in advanced countries like the U.S. and the U.K.; 6) the enormous problem of world and youth unemployment; 7) how a potential energy crisis could damage the Russian economy; 8) a low trust-factor for businesses and their need to do more to resolve social inequalities and increase transparency; 9) the effects of the leadership decision making processes; and 10) how technology and data collection will be combined to become a bigger part of our everyday lives.

The Economist, as usual, used its dry sense of humour to show the `other side´ of the WEF at Davos mountain ski resort. That side is one that includes some influential leaders not showing up, an Edelman Trust Barometer showing very low results for the political and business leaders (only 13% and 18% tell the truth, respectively) whose top-down leading style isn´t proving effective (“there is nothing more top down than trying to lead the world from high up a mountain”) and even a knock on the famous WEF Young Global Leaders saying that their arrogance is only boosted by their title (that, and the $1 million exclusive party thrown by Sean Parker – of Napster – and two other British up-and-comers under the title “The future of Philanthropy”).

Listening to some of the sessions that were filmed during the forum shows that the insight, thought and desire to improve the state of the world is truly being manifested but does not reach the real world itself. Global leaders that aren´t capable to lead by example and the forum they sometimes use for purposes other than fixing real world issues both have lost their appeal and both will need to work hard to regain their trustworthy reputations. However, they can start in the next World Economic Forum on Latin America: Delivering Growth, Strengthening Societies, set to take place in Lima, Peru the 23-25 of April, 2013.

The fact that these world forums have very lofty ideals and even loftier guest lists is one reason that the heydays of the Davos summit have passed and that people aren´t paying attention to it anymore. Another reason is that, like other world-famous summits such as Kyoto, Copenhagen, G-20s, G-8s, etc., very few tangible things are actually produced, members can decide not to sign agreements and it seems that the `follow-through´ is in general very low. Few forums can compare in this sense to the Bretton Woods conference in which the U.S. announced it was leaving the gold standard and, subsequently, followed through on its promise. Yet another reason that the WEF at Davos does not sit well with the public is that its participants, members, politicians, CEOs and celebrities form part of the top-1% (in terms of wealth and influence) that still is being blamed as the main culprit for the economic hardships of today´s world.

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