‘Resilience’ Worries at Davos World Economic Forum

The World Economic Forum

-Robert Scoble

The 2013 Davos World Economic Forum’s vision, articulated by its founder and executive chairman Klaus Schwab in a recent Project Syndicate article, leaves me with a couple furrows on my brow. Not that I am unfamiliar with the rather single-minded nature of the Davos discussion agenda, or with the criticisms that are leveled against the Forum. This time though, the issue with the Forum’s large frame/theme is rather subtle.

There are, we are told, two main objectives to this year’s forum:

First, the economic crisis has created a more defensive, more self-centered, and – at the level of states – more protectionist attitude. Grand unifying visions are missing, and the pressure for separation, not union, continues to increase. This has stalled progress on many of the issues – including reducing carbon emissions, establishing global financial regulatory measures, and concluding the Doha Round of global trade talks, to name a few – that require global attention.

The first objective is then to foster further global cooperation, under the idea that combined solutions (a “grand vision”?) to economic and financial problems are needed to bring the world economy into a new growth dynamic. Discursively speaking, nothing new. The second point is as follows:

The Forum has always promoted the notion of corporate social responsibility – or, expressed differently, of business leaders being accountable not only to their employees and shareholders, but also to their communities and society at large. So, my second objective for Davos this year is for all leaders to recognize that along with their economic responsibilities come moral as well as social obligations.

The second objective is slightly newer (but not really) in that it puts forward a social responsibility for the private sector, specifically mentioning (later on in the text) corporate social responsibility. Ultimately the idea is probably to pose the question of the ill-effects of austerity and adjustment policies in countries hit by the global financial and Eurozone crises.

Objectives Properly Addressed?

The talk always sounds great. But there is no indication that any of this is actually going to happen, beyond words, at Davos. When you look at the response of states and companies to the financial crisis in terms of cooperation (here mainly in Europe) it is clear that not only is there much to be desired, that which is being decided comes from a logic of relative economic influence, political clout (and interestingly enough, discursive identity) within the EU’s echelons of power. The WEF will probably not have an impact significant enough to change the way European countries interact in their own playground.

Second point of worry: even a layperson can see that objective number one is going to overpower objective number two without any special consideration for this latter one. How are French companies coming together with the government and labor to solve competitiveness problems and factory closings? Answer: They’re not. The order of the day, much to the chagrin of French minister Arnaud Montebourg (holder of the most unenviable title of ‘Minister of Industrial Renewal’) is for companies to argue that, affected as they are by the crisis, they have no choice but to lay off workers and have the remaining workforce take on longer or more irregular hours for less pay- or else the company closes up shop and moves to Morocco. The French government has an active hand in promoting these sorts of flexibility deals- anything to put a band-aid on the employment situation. The companies may become slightly more protected, but it’s not at all clear that the workers who get laid off or those who slip into poverty gain much in resilience.

Third point: while corporate social responsibility (CSR) is a nifty model which can and has demonstrated that win-wins are possible, most interestingly in developing economies, the question is less if CSR should be promoted, and more how to ensure CSR design that contributes to sustainable development. How to ensure that CSR is carried out in coherence with existing development agenda? Will proper attention be given to the failures and the lessons of profitable but not social viable CSR projects at the forum? This is one point I continue to watch with interest.

It is right to bring resilience to the table- it is yet another way that the traditionally very… economic WEF can inject a little social in its veins.

But in rushing to pose the question of resilience, Davos may have forgotten to ask ‘whose resilience?’

Emerging Africa: More Questions

View from the Heritage Hotel, Dar es Salaam- Seyemon

View from the Heritage Hotel, Dar es Salaam- Seyemon

The tone was slightly reminiscent of an afro-pessimism/afro-optimism debate, but the January 11 rebuttal article of Rick Rowden’s Foreign Policy piece certainly makes some good points.

The interesting framing of the problem, (à savoir, ‘going the way it is going and pursuing the path it is on, will many countries on the African continent achieve more economic development?’) is in terms of what African countries do with the resources they have.

The authors of the book The Fastest Billion: The Story Behind Africa’s Economic Revolution make five big arguments for progress on the continent:

  1. Social and economic policies in many African countries are seeing a shift akin to that which took place in East Asian countries before their ‘takeoff’
  2. African countries are doing (and will keep doing) better at reinvesting the gains from agriculture and primary goods exports into infrastructure, services and other higher value-added production which will drive production in the future
  3. Rising wages in China and other Southeast Asian countries can cause a renewed interest in African countries for labor-intensive production
  4. Education levels are also rising on the continent, which will spur on the advent of industrialization and manufacturing
  5. Ease of doing business indicators have been getting better, corruption as well, and this is creating a more favorable environment for growth

After reading this I simply must get my hands on this book, The Fastest Billion. There are simply too many questions that I could not find answers for in the short Foreign Policy article. The book, I think, should be great for providing paths to the following questions:

–          Is agriculture really doing all right? Are the African countries in the so-called middle income stage of growth being supported by the agricultural sector? The authors mentioned the importance of agriculture as a basis for industrialization in Korea; is this the same case in African countries? Niger and Gabon are two countries with interesting plans to reduce reliance on food imports- is this type of state-led program the way to go?

–          Is it really easier to do business on the continent? There might be some improvement over the last 5 years in African countries’ scores on the World Bank’s Doing Business Index, but are these the result of steady improvement in policies? Here I surmise the answer will vary vastly among countries. Rwanda’s indicators for this year are leaps and bounds better than just four years ago, and are driven by a government dedicated to change. But so many countries are not showing much steady progress, while they also face trouble in corruption indicators.

–          Are resources being properly reinvested in value-added industries? There is much talk as to the extent to which these resources need to all be funneled into new industries- they are not the end-all be all of economic development, and first ensuring a population’s basic needs are addressed makes more sense on so many levels. But where are the oil dollars and copper and bauxite dollars going? I don’t have nearly as good an idea of this as I would like.

–          Are African countries really on track to absorb higher value added production, successfully move up global commodity chains and mobilize their population’s rapidly growing education? My most vivid memory over the last year were the protests in several countries by what were essentially overeducated youth, who invested precious years in study only to find that there were few, if any jobs available for them in their countries. Successes in primary education in Africa are becoming more and more known, and many have pointed to tertiary education as a sort of new education frontier for many countries. But how well is this skilled labor being absorbed by these economies? I really want to know.

For now there are only questions.

But the beginning of an answer will probably come more from looking at individual countries, as opposed to trying to rationalize trends across the great diversity that is the Continent.

Chris Blattman

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