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RSTV: THE BIG PICTURE- WORLD ECONOMIC FORUM- SUMMER DAVOS 2019


RSTV: THE BIG PICTURE- WORLD ECONOMIC FORUM- SUMMER DAVOS 2019


Introduction:

An effort to promote and strengthen globalization is the focus of the World Economic Forum’s 13th Annual Meeting of the New Champions, which taking place on July 1-3 in the city of Dalian in northeastern China. Also known as the Summer Davos, the meeting has become synonymous with China, being held alternately on an annual basis in Dalian or Tianjin. It is basically the World Economic Forum’s global meet to promote innovation, science and technology. The theme of the Annual Meeting of the New Champions 2019 is “Leadership 4.0: Succeeding in a New Era of Globalization.” It sums up the main focus of the gathering which will attract more than 1,800 leaders of diverse fields from around the globe. The participants represent politics, business, trade, civil society, academia and media. According to the organizers, 70% of the guests will come from outside China, representing 120 countries covering more than half the world. Last year, the Tianjin Summer Davos drew some 2,500 business leaders, policy makers and experts from over 111 countries for a global discourse focusing on the theme of “Shaping Innovative Societies in the Fourth Industrial Revolution.

 

World Economic Forum:

  1. It was established in 1971 by Klaus Schwab as a not-for-profit foundation
  2. headquartered in Geneva, Switzerland
  3. Formerly called European Management Forum

Motto : Committed to improve the state of the world

  1. It is the International Organization for Public-Private Cooperation. The Forum engages the foremost political, business and other leaders of society to shape global, regional and industry agendas.
  2. It is independent, impartial and not tied to any special interests.
  3. The Forum strives in all its efforts to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance. Moral and intellectual integrity is at the heart of everything it does.

Governance

  • Chairperson : Founder and Executive Chairman Professor Klaus Schwab
  • Board of Trustees : exceptional individuals who act as guardians of its mission and values, and oversee the Forum’s work in promoting true global citizenship.  Its membership is divided equally between representatives of the business community and leaders from international organizations and civil society.
  • Managing Board : acts as the executive body of the WEF& acts as its representative to outside parties.
  • The organization also convenes some six to eight regional meetings each year in locations across Africa, East Asia, and Latin America, and holds two further annual meetings in China, India and the United Arab Emirates
  • Until 2012, it had observer status with the United Nations Economic and Social Council; it is under the supervision of the Swiss Federal Council.

Publications

  • Global risk report, 2018
  • Readiness for the future of production
  • Global gender gap report
  • Inclusive development index
  • Global competitiveness report (index)
  • Global human capital report (index)
  • Travel and tourism competitiveness report (index)
  • Global energy architecture performance index report

 

Summer annual meeting:

In 2007, the foundation established the Annual Meeting of the New Champions (also called Summer Davos), held annually in China, alternating between Dalian and Tianjin, bringing together 1,500 participants from what the foundation calls Global Growth Companies, primarily from rapidly growing emerging countries such as China, India, Russia, Mexico, and Brazil, but also including quickly growing companies from developed countries. The meeting also engages with the next generation of global leaders from fast-growing regions and competitive cities, as well as technology pioneers from around the globe. The Chinese Premier has delivered a plenary address at each annual meeting.

 

Globalisation 4.0

 

Globalization refers to the integration of economies through the exchange of goods, people and ideas. It views the whole world as a ‘Global village’ or ‘World without trade borders’.

Globalization 4.0 is the third unbundling, which would happen when digi-tech allows arbitrage of international wage differences without the physical movement of workers. Globalization 4.0 is going to hit the service sector. Hundreds of millions of service-sector and professional workers in advanced economies will, for the first time ever, be exposed to the challenges and opportunities of globalization 4.0.

New era of Globalization[the concept has been discussed in depth here]:

  • Globalization 1.0 was pre-World War 1 globalization, which was launched by a historic drop in trade costs when steam and other forms of mechanical power made it economical to consume goods made faraway. This globalization came with almost no government support. There was no global governance and there was little domestic policy to help share the gains and pains of more intense international arbitrage in goods. Laissez-faire capitalism, imperialism and various forms of autocracy ruled this era mostly.
    • However, the two world wars, the Great Depression, and the rise of communism and fascism resulted in hundreds of millions of humans being killed by other humans. This led to the end of G-1.0.
  • Globalization 2.0 is the post-World War II phase where trade in goods was combined with complementary domestic policies that helped share the pains and gains of globalization (and automation). The market was in charge of efficiency; the government was in charge of justice. Internationally, Globalization 2.0 saw the establishment of institute-based, rule-based international governance, specifically the UN, IMF, World Bank, GATT/WTO and many specialized agencies like the FAO and ILO.
  • Globalization 3.0 is the second unbundling, or the New Globalization. Arvind Subramanian called it hyper-globalization, Gary Gereffi called it the global value chain revolution, and Alan Blinder called it offshoring. The key is that globalization now meant factories crossing borders, and – critically – the know-how of G7 firms along with them. This created a new world of manufacturing in which high-tech was combined with low wages.
    • This new combination disrupted the lives and communities of workers struggling to compete with high wages and high tech as well as those struggling to compete with low wages and low tech.
    • Workers employed in goods-producing sectors were the most affected, since this unbundling mostly affected goods-producing sectors. In particular, the monopoly that G7 factory workers had on G7 manufacturing technology was broken when their employers moved jobs and know-how abroad.

Globalization 4.0: As explained above, the G-4.0 will impact the service sector mostly. It is in parallel with the IR 4.0. The various disruptive technologies like Artificial Intelligence, Big Data, Internet of Things, Block-chain etc. will play key roles in this. Rather than shaping a parallel hegemonic structure, globalisation 4.0 intends to correct the flaws inherent in globalisation 3.0 that allowed the dominance and wealth superiority of the great economic powers to hinder the optimisation and evolution of the global governance structure.

Globalization 4.0 and fighting climate change:

        Climate change, arguably humanity’s most existential challenge, requires urgent global action. IPCC’s Special Report on the Impacts of Global warming at 1.5°C, published in October 2018, says we have just 12 years to act if dangerous climate change is to be avoided. With the rise in protectionism, rising national interest, G-4.0 is imperative to tackle the climate change with global efforts.

  • By building new forms of alliances within and between the private and public sectors. Example: The Alliance of CEO Climate Leaders: This group of CEOs, with collective company revenues of more than $1.5 trillion, have already reduced their collective emissions by 9% since 2015 and are committed to do more
  • By forging new clubs of like-minded governments, cities, states and provinces. Example: International Solar Alliance initiative which has about 120 countries
  • By building new leadership platforms for policy experimentation and public-private action, each targeted to suit different industrial, national and regional agendas.
  • With the rapid technological advances of the IR 4.0, we will also be able to harness new means of monitoring, verifying and reporting the progress (or lack thereof) of global, regional and industry actions on climate.
  • This will also lead to radical new forms of distributed information transparency and real-time disclosures. Example: Internet of Things to capture and transmit data at real-time in highly polluted areas in cities.
  • Increased transparency will boost awareness and simply heighten the pressure to act.

 

Growing use of Technology in global value chain:

The digital space and the evolution of AI and its interplay with human capabilities is one of the key concern which this summit is going to take on. As per new research, technologies such as digital manufacturing and robots could result in job losses in the region. Tech advances along these value chains are associated with decrease in employment in both routine, non-routine occupations. The present industrial revolution (IR 4.0) seeks to disrupt the existing processes and enhance them with programmable logic. Even in the white paper it is said that technology disrupts trade more than tariff and even the same is explained above.

Robots and automated systems have made inroads into organizations where tasks may have been dangerous, impossible or just plain mundane for humans. Market sentiments suggest that the job market does not stay static but changes constantly with innovation in technologies.

Impact of technological advances in India:

  • Automation threatens 69 per cent of the jobs in India, while 77 per cent in China, according to a World Bank research which has said that technology could fundamentally disrupt the pattern of traditional economic path in developing countries.
  • There is no clearly stated policy document or vision statement for AI development.
  • The negative effects of technological change exceed the favourable effects of task relocation, thus hurting overall employment.
  • New technologies like AI and Robotics improve the functional efficiency drastically than manual methods. Thus large industries will increasingly shift towards the automation in the quest of higher productivity
  • Textile workers in developing countries, who are an important example of how labour-intensive countries contribute to the global value chain, are now being replaced by robots in advanced countries.
  • Asian Development Bank study also shows that in eight of the 12 developing Asian economies studied, there has been a change in the nature of jobs because of technology.
  • In countries such as India, Indonesia, and China, non-routine jobs, which require more skill, have grown faster in comparison to routine jobs.
  • Many tasks undertaken (manually) by humans about 20-30 years ago are no longer relevant.
  • Manual tasks would become increasingly automated for business efficiencies and scale.
  • Information technology (IT), IT-enabled services (ITeS) and security services, followed by banking, will be the first sectors to feel the heat, wherein manual transactions and processing jobs will become obsolete. Huge numbers of services jobs in these sectors will be made redundant as a few lines of code will be able to perform the same tasks efficiently and effectively.

Way Forward:

  • India has already started preparation in AI and should not miss this bus particularly.
  • Skill upgradation and training to cater the need of the industries.
  • Emphasize our startup culture
  • Incentivizing and encouraging automation in sectors where it is critically necessary.
  • Focusing on increasing the efficacy and efficiency of Micro, Small and Medium scale industries.
  • Reorientation of trade taking place everywhere so India must reap the benefits of protectionism
  • Play a major role in global scenario.
  • New regulations must be put in place to clearly predict and address legal issues that will surround AI in the near future. The use and availability of the technology must also be revised and regulated in a way to prevent or minimize ill use.
  • Government needs to be inept in creating new employment-generating sectors and reform existing ones at a time when machines are systematically cutting down the workforce requirements in the principal labour-generating triumvirate of manufacturing and services sectors.
  • Policymakers should make AI a critical component of the prime minister’s flagship Make in India, Skill India, and Digital India programs
  • Need to bring structural changes in employment-stagnated areas like Textile, cotton industries to increase employment opportunities in these areas.
  • Government needs to bring more and more workers under formal economy so that they enjoy benefits of social security provided by government and companies

 

Globalisation 4.0 should be more sustainable, reasonable and balanced version, led by innovation, inclusiveness, shared benefits and tolerance. Globalization 4.0 seeks to promote: practical, public-private arrangements to help governments find agile, collaborative solutions to pressing global problems in our more complex world, which is being rapidly transformed by the IR 4.0.

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