World Economic Forum Annual Meeting 2007

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World Economic Forum Annual Meeting 2007

  1. 1. Annual Meeting 2007 Shaping the Global Agenda: The Shifting Power Equation Davos, Switzerland 24-28 January The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (www.weforum.org)
  2. 2. The views expressed in this publication do not necessarily reflect those of the World Economic Forum. World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Contents Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 E-mail: contact@weforum.org www.weforum.org © 2007 World Economic Forum All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information Page 3 storage and retrieval system. Preface REF: 150207 Page 4 Executive Summary Page 8 Economics: New Drivers Page 14 Geopolitics: The Need for Fresh Mandates Page 18 The Davos WorkSpace – CEO and Future Series Page 20 Business: Leading in a Connected World Page 26 Technology and Society: Identity, Community and Networks Page 30 Acknowledgements
  3. 3. Preface “ We are living in an increasingly schizophrenic world where economies are booming and global signs are promising but underneath are “ economic, political and social risks as well as imbalances and inconsistencies. Klaus Schwab Founder and Executive Chairman of the World Economic Forum The World Economic Forum Annual Meeting again The focus on the shifting power equation across offered participants – both those in Davos and those economic, political and social relationships served to joining us through the Internet – the opportunity to highlight how the thinking of leaders has evolved over examine the many critical forces affecting the global the past years. Whether on the G8 agenda, or that of agenda, gain a deeper understanding of these business, not only did participants agree on priorities – pressing issues and create fresh ways to meet the climate change and the need for sustainable challenges ahead. development were certainly at the forefront – but they also formed a consensus on the shape any response The theme of the Annual Meeting 2007, Shaping the must take: the only way to create effective solutions is Global Agenda: The Shifting Power Equation, struck a through the combined effort of leaders from business, chord with participants, reflecting the unease we all government and civil society to identify problems feel living in times that both inspire great optimism and clearly, discuss the relevant issues and understand the raise grave concerns. Positive sentiment about the trade-offs. vibrant global economy and the prospects for continued growth was matched by persistent anxiety The World Economic Forum Annual Meeting 2007 about ongoing shifts in the geopolitical landscape and drew leaders from business, government, international the difficulty of addressing such complex problems as institutions, non-governmental organizations, poverty in Africa and instability in the Middle East. The universities and other communities. Together with our growing economic and strategic importance of Members and Partners, we renewed our commitment emerging economies and resource-rich nations, the to driving the global agenda forward through recognition of the urgent need to address climate consensus building and meaningful action. We look change, and the exciting but sometimes disquieting forward to continuing the conversations and exchange implications of new community models, often virtual in of ideas that began in Davos at our regional meetings nature, gave the assembled business, government and through Forum initiatives and industry activities and civil society leaders much to discuss, digest and over the coming year. act upon. 3 | World Economic Forum Annual Meeting 2007
  4. 4. The Shifting Power Equation – Executive Summary “ “ Perspectives are changing. The fact “ Globalization is the single greatest “ is that a completely new global economic engine of our time balance of power is being created. Angela Merkel Tony Blair Federal Chancellor Prime Minister of Germany of the United Kingdom The theme of the World Economic Forum Annual Davos, as E. Neville Isdell, Chairman and Chief • Agreement among four global accounting firms to The Annual Meeting agenda was designed to help the Meeting 2007 – Shaping the Global Agenda: The Executive Officer of The Coca-Cola Company, put it, is work with the World Economic Forum Partnering 2,400 participants in Davos and those outside who Shifting Power Equation – underscored the particular the “epicentre of engagement.” The Meeting’s Against Corruption Initiative (PACI) to support the joined the conversation through the Internet – perhaps challenge of this period of rapid globalization. “We are outcomes amply illustrated the unique approach that fight against corruption through their Second Life avatars – to understand the living in an increasingly schizophrenic world where the Forum brings to the global agenda through • Renewed affirmation of support for the PACI from many aspects and implications for business and economies are booming and global signs are participating government, business, media, academic the heads of the World Bank, the African societies of globalization and the shifting power promising but underneath are economic, political and and civil society leaders from across countries, Development Bank, the Asian Development Bank, equation. The programme was organized under four social risks as well as imbalances and continents and cultures. It was precisely because of the European Bank for Reconstruction and sub-themes – Economics: New Drivers; Geopolitics: inconsistencies,” said Klaus Schwab, the Forum’s this potent mix of actors that, at this Meeting more Development and the International Finance The Need for Fresh Mandates; Business: Leading in a Founder and Executive Chairman. “We want to make than any previous one, the Davos community defied Corporation Connected World; and Technology and Society: sense of this world and shape the global agenda, the risks, concerns and lingering doubts to move from • Release by the World Economic Forum and the Identity, Community and Networks. taking into consideration the fragilities of global awareness and commitment to concrete action on Reinventing Bretton Woods Committee of the final development and global systems. This is the unique climate change and sustainability. report on a two-year, public-private review of the contribution we make each year – to analyse the state international monetary system in cooperation with The Forum would like to thank the distinguished of the world, the challenges, risks and opportunities. Among the outcomes of the Annual Meeting: G20 governments Co-Chairs of the World Economic Forum Annual We sort out our priorities and come out with solutions Meeting 2007, each of whom provided invaluable to our problems.” • Decision by 30 trade ministers to restart the Doha Another notable outcome from Davos was the support to the proceedings and brought their Round of global trade negotiations at the sub- recognition that the Forum and its partners in the considerable experience and wisdom to the ministerial level which subsequently led to a full business community and civil society have a discussions. resumption of the talks responsibility to promote open discussion of “ The rise of China, India and other • Formation of the Climate Disclosure Standards globalization, both its advantages and disadvantages, Michelle Guthrie, Chief Executive Officer, Star Board, a new international partnership to establish a how those benefits can best be enhanced and Group, Hong Kong SAR countries in Asia is not a threat but an generally accepted framework for climate risk- shared, and how the negative effect can be reduced E. Neville Isdell, Chairman and Chief Executive opportunity. When you see the incredible related reporting by corporations and those affected helped. “Most people who are hurt Officer, The Coca-Cola Company, USA consumer market opportunity for global or think they are hurt by globalization know it,” said Sunil Bharti Mittal, Chairman and Group Managing • Establishment of a joint Israeli-Palestinian business businesses, it is quite extraordinary. The Renault President and Chief Executive Officer Carlos Director, Bharti Enterprises, India council to encourage and facilitate cooperation “ Ghosn, who is also the President and Chief Executive James J. Schiro, Group Chief Executive Officer and between Israeli and Palestinian business leaders shifting power equation does not have to Officer of Japanese automaker Nissan. Added Chairman of the Group Management Board, Zurich and to reinforce economic relationships and help mean that there are winners and losers. Unilever Group Chief Executive Officer Patrick Cescau: Financial Services, Switzerland peace building efforts Michelle Guthrie “Globalization is worth defending. It is also worth Eric Schmidt, Chairman of the Executive Committee • Creation of an alliance of leading companies to being explained.” and Chief Executive Officer, Google, USA bring power to villages in sub-Saharan Africa 4 | World Economic Forum Annual Meeting 2007 5 | World Economic Forum Annual Meeting 2007
  5. 5. Most people who are hurt or think they “ are hurt by globalization know it. Most people who benefit do not know it. What “ we need to do is come in with concrete cases and messages. Carlos Ghosn Carlos Ghosn President and Chief From left to right: Eric Schmidt, Chairman of the Executive Committee and Chief Executive Officer, Google, USA; E. Neville Isdell, Chairman and Executive Officer, Chief Executive Officer, The Coca-Cola Company, USA; James J. Schiro, Group Chief Executive Officer and Chairman of the Group Management Renault, France; Board, Zurich Financial Services, Switzerland; Michelle Guthrie, Chief Executive Officer, Star Group, Hong Kong SAR; Sunil Bharti Mittal, President and Chief Chairman and Group Managing Director, Bharti Enterprises, India Executive Officer, Nissan, Japan Economics: New Drivers Geopolitics: The Need for Fresh Business: Leading in a Connected Technology and Society: Identity, Mandates World Community and Networks While globalization has resulted in an unprecedented expansion of global trade and investment that has The international community’s capacity to handle the The proliferation of technology, global risks and the The rapid convergence of telecommunications, cable spurred the world economy to grow at its fastest pace complex and fast-changing global agenda is multiplying pressures from rapid globalization have television and the World Wide Web is driving the in three decades, lifting hundreds of millions out of hampered by the sometimes perplexing shifts in increased the responsibilities of companies and their growth of new services that blur the line between poverty, the benefits are not evenly shared. Renewed power relationships that are playing out, particularly leaders, challenging them to find new and innovative audience and producer, resulting in an explosion of efforts are needed to mitigate the negative effects of the emergence of new poles of influence and non- approaches to doing business. Chief executives must user-generated information, entertainment and globalization. state actors. now look beyond shareholder interests and cater for services. The impact of this power shift is affecting the needs and concerns of a wider group of everything from corporate communications to • Growing unease, in particular about job creation • While the US remains the dominant world power, its stakeholders. elections, from the way companies conduct R&D to and security, could lead to political backlash. To position is increasingly challenged or constrained by the social behaviour and privacy of individuals. counter this, both government and business have to new emerging players such as China and resource- • The CEO’s main task is to enhance collaboration better communicate the benefits of globalization. rich Russia, as well as states with nuclear and develop new partnerships to address everything • The expansion of customer-generated content and More measures must also be taken to insulate capabilities and ambitions such as North Korea and from the challenge of research and development to online communities on popular websites such as workers from the negative effects of competition in Iran. strategic issues such as climate change. YouTube and Second Life have perplexed the increasingly global labour market. • This new world order requires a fresh, pragmatic Companies cannot rely on old command-and- incumbents but opened tantalizing new business • Greater attention must be paid to the impact of the approach to global governance and management of control models. opportunities. rising tide of capital flooding through the world’s the global agenda, including the reform of • Companies also face rising pressures from As they develop in quality, virtual worlds could • financial markets and the fact that financial international institutions and agreements to technology-empowered consumers, employees who become the common interface for all Internet usage. innovations are deepening the connections among rebalance relationships in the world to acknowledge want to work for socially responsible enterprises, The growth of online communities is spurring • global markets. power shifts. and shareholders who demand greater transparency debate about the ability of the Internet to break • Urgent steps must also be taken to combat the • The ultimate power shift is the rise of non-state and better governance. down barriers based on geography, nationality, sex negative effects of increased industrialization and actors – no longer a term that instantly connotes • The expanding role of emerging markets both as a or appearance. The practice of using avatars is also energy consumption related to rising living malevolence as it had in the past. Grassroots destination for investment and as a source of raising questions about the impact on social standards. Because of the difficulty in forging a movements, communities, civil society and investor capital is raising difficult questions about interaction and psychological health. global consensus on an approach to climate companies are forging novel partnerships to everything from national security to clashing Grave concerns about privacy, security and online • change, nations should undertake unilateral efforts develop new solutions and tackle global challenges cultures. In emerging markets, CEOs must also fraud threaten to derail the future of Internet to limit carbon emissions and support international such as climate change. address the particular challenge of human resource commerce. mitigation efforts, such as carbon trading management. IT advances are changing the way institutions and • programmes. • Intense scrutiny and stress on the management of companies collaborate within their organizations and • Efforts are also required to plan for coming public companies are increasing interest in with each other, particularly in R&D. demographic imbalances, focusing on job creation privatization and fuelling in part the rapid expansion for the young and pension and healthcare reforms of private equity investment. But private ownership to address ageing populations. does not shield companies from the pressures to which they must respond. 6 | World Economic Forum Annual Meeting 2007 7 | World Economic Forum Annual Meeting 2007
  6. 6. Economics: New Drivers “ “ I worry about how the US responds to the fact that its hyperpower status in terms of wealth India is a willing partner on climate change, but clearly it’s not a willing punching bag because it “ has to be reduced. It doesn’t mean that the US is any worse off but the US response is has its limitations. A billion people are going to be consuming a lot of services and goods that “ something that the world has to worry about. will create emissions. We will need technology; we will need money. But India will be willing to align with the world. Laura D. Tyson Sunil Bharti Mittal Laura D. Tyson Min Zhu Montek S. Ahluwalia Sunil Bharti Mittal Professor of Group Executive Vice- Deputy Chairman, Chairman and Group Economics, University President, Bank of Planning Commission, Managing Director, of California, Berkeley, China, People's India Bharti Enterprises, USA Republic of China India Since the opening of China and the fall of the Soviet This astonishing growth in global wealth is creating its Perhaps the biggest challenge stems from the uneven In short, this new period of global growth is producing bloc, the ideological shackles of the cold war have own problems, however. Widespread pollution is distribution of surging global wealth. Millions are being many of the same imbalances and inequities that been cast aside, reuniting the world’s biggest markets wreaking havoc on the environment, causing changes lifted out of poverty, it is true. Rising fortunes are during the Industrial Revolution gave rise to and ushering in a gilded age of growth, the likes of to the climate that sustains life itself. Booming spawning a new cosmopolitan class of global super- nationalism, fascism and communism. Many fear that which has not been seen since the Industrial demand for resources has created shortages of raw rich – free to roam where taxes are lowest. Yet similar reactionary or even retrogressive forces could Revolution. materials, sending commodity prices up and thrusting incomes among the politically powerful middle class again be rising. resource-rich nations into disproportionate positions of that they leave behind are rising more slowly – so The United States is still an economic powerhouse, influence (see Figure 1). slowly that to many it seems as though they are Heading off the political backlash will require a but it has been largely supplanted at the forefront of standing still or even slipping behind. “They have a concerted effort by both governments and business to growth by China and India and other emerging diminishing sense that we are all in the same boat,” better publicize the benefits of globalization. “Most Figure 1 World Commodity Prices and Demand from BRIC Nations economies. “The world is no longer as dependent on said former US treasury secretary Lawrence H. people who are hurt or think they are hurt by As the developing world consumes more metals, prices are rising a single locomotive,” said Economics Professor Laura Summers, now the Charles W. Eliot University globalization, know it. Most people who benefit do not 350 D. Tyson. Even the once-moribund economies of Professor at Harvard. know it,” said Carlos Ghosn, who heads Renault and 300 Index (100=1996) Europe and Japan are enjoying growth as China and Nissan. “What we need to do is come in with concrete 250 200 India provide new sources of labour and consumer cases and messages.” 150 demand that are helping to keep the cost of capital 100 low as global incomes rise. “ 50 Let’s face it: to manage globalization in 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 developing countries a huge amount of Steel price Steel consumption Aluminium price Aluminium consumption Copper price Copper consumption energy has to be put politically – at least in Source: Datastream; International Iron & Steel Institute; World Bureau of Metal Statistics an open society – on arguing these issues “ Insecurity threatens globalization The mountains of wealth are exerting new and little and educating the public. You need a “ understood pressures on financial markets. Prosperity and the growth that we are enjoying comparable debate in the wealthy “ has created a demographic paradox: lower birth rates today. There is a danger that some countries that isn’t happening. that are leaving the wealthiest nations short of new societies will look inward. workers to help finance the rising cost of healthcare Montek S. Ahluwalia and retirement among older generations. E. Neville Isdell 8 | World Economic Forum Annual Meeting 2007 9 | World Economic Forum Annual Meeting 2007
  7. 7. From left to right: Gloria Macapagal Arroyo, President of the Philippines; Felipe Calderón-Hinojosa, President of Mexico; John McCain, Senator from Arizona (Republican), USA; Paul D. Wolfowitz, President, World Bank, Washington DC; Ellen Johnson Sirleaf, President of Liberia Urgent steps also need to be taken to mitigate the programmes, even in the absence of a global Ultimately, the negative impact of a rapidly globalizing negative side effects of globalization. Climate change consensus on what form those efforts should take. labour market will increasingly affect workers in is an especially critical global priority. While developed Some also argue that, because a multinational developed countries, which could lead national countries to date have the highest carbon emissions, solution is unlikely to emerge in time to reverse climate politicians to promote greater insulation of domestic fast-growing developing economies are rapidly change, efforts must be made to prepare for the employment and protectionism. How can this be catching up (see Figure 2). China is expected to inevitable impact of it. avoided? Some suggest a kind of universal tax on the surpass the US as the top producer of greenhouse “cosmopolitan” class – those who can most benefit gases by 2009. Another vexing issue is the rising tide of capital from globalization – or at least some form of flooding through the world’s financial markets, though international tax harmonization. Others believe the it is not clear if anything can or needs to be done to answer may lie in shifting the burden of health Figure 2 Developed vs Developing World Carbon Emissions address this development. Cheap capital has been a insurance to the state and beefing up public Developed world countries are major emittors of carbon dioxide, to date boon to developing nations, lowering their financing unemployment insurance. “We have to move the 30 costs and enabling them to dig their way out of debt. social protections from the basis of the corporation to 25 metric tons of carbon dioxide) Carbon emissions (billion But to compensate for low interest rates, investors are the basis of society,” said Columbia University 20 taking advantage of cheap funding costs to make Economics Professor Joseph E. Stiglitz. “The 15 more leveraged investments. An increasing amount of While most funds do not disclose their portfolios, recognition of that is a change in mindset.” 10 public pension funds and private savings are flowing many have been investing increasingly in sophisticated 5 into hedge funds (see Figure 3) and private equity and little understood instruments such as credit 0 1903 1906 1909 1912 1915 1918 1921 1924 1927 1930 1933 1936 1939 1942 1945 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 funds, which in turn use unconventional investments derivatives. With multilayered, leveraged investments Developed nations Developing nations to generate higher returns. including funds of funds, institutional funds and hedge funds, bankers and regulators worry that the impact of Source: World Resources Institute any financial shock could be amplified. “Countries Figure 3 Hedge Fund Assets need to do their homework to reduce the risks of Hedge funds manage 30 times more assets today than they did in 1990 While efforts are being made to improve energy these instruments and investing habits. We need to efficiency in China and India, breakneck economic improve documentation and address legal issues,” 10,000 $1,400 Assets under management (US$, billion) 9,000 growth is taking a devastating toll on the said Chilean Central Bank President Vittorio Corbo. $1,200 Number of funds 8,000 environmental health of these nations. Despite the $1,000 7,000 6,000 recent jump in oil prices, research for greener energy $800 5,000 $600 by the world’s largest polluter, the United States, has 4,000 3,000 $400 been shrinking. Given the rising costs associated with 2,000 $200 1,000 climate change, it has become clear that nations 0 0 should undertake unilateral efforts to limit their own 1990 2000 2006 Assets Funds carbon emissions and to support international efforts to reduce emissions, such as carbon trading Source: Hedge Fund Research Inc. 10 | World Economic Forum Annual Meeting 2007 11 | World Economic Forum Annual Meeting 2007
  8. 8. Getting the Doha Round Back on Track Reshaping the International Monetary System On the penultimate day of the World Economic Forum The World Economic Forum and the Reinventing The report includes a selection of the papers prepared Estimates of Potential World Gains from Doha Annual Meeting 2007, World Trade Organization Bretton Woods Committee (RBWC) issued at the for the project that offer specific proposals for reform Will they be enough to persuade governments to incur relevant costs? (WTO) Director-General Pascal Lamy told participants World Economic Forum Annual Meeting 2007 the final in such areas as strengthening the international $350 300 that the discussions among the 30 trade ministers in report of a two-year review of the international adjustment process, improving crisis prevention and Estimate of potential gains in global income (US$, billions) World Bank estimates Carnegie Endowment estimates 250 Davos had given new impetus to the stalled Doha monetary system conducted in cooperation with the resolution instruments, and modernizing and 200 Round. “Today’s ministerial meeting has put quite a lot Group of 20 (G20) governments. Entitled The rationalizing the governance of the system’s principal 150 of energy into the notion that the landing zone is in International Monetary System, the IMF and the G20: institutions. Among the notable proposals is one 100 50 sight,” said Lamy. Added Kamal Nath, India’s Minister A Great Transformation in the Making?, the report presenting a new “business model” for the IMF. 0 Full liberalization Likely Doha scenario*/Central Doha scenario** of Commerce and Industry: “Despite the cold outside, concludes that a critical mass of governments Another outlines significant yet feasible improvements * World Bank likely Doha scenario entails reducing agricultural tariffs 44% by developed countries and 21% by we have been able to defreeze the talks that were appears ready to try to adapt international financial in the exchange rate system that could help prevent developing countries, and manufactures tariffs by 50% by developed countries and 33% by developing countries ** The Carnegie Endowment central Doha scenario entails agricultural ad valorem equivalents (AVEs) reduced by 36% frozen.” Days later, negotiators at the WTO in Geneva institutions to a world characterized by increasingly large, persistent economic imbalances of the kind that by developed countries and 24% by developing countries (excluding LDCs), and manufactures AVEs reduced by 50% by developed countries and 33% by developing countries (excluding LDCs). agreed that full talks to set a framework for concluding large cross-border private capital flows, wider threaten world financial stability today. Source: World Bank, Carnegie Endowment the Round would resume. The negotiations were geographic distribution of economic activity and suspended in July 2006 largely due to disputes over deepened regional macroeconomic and international “ agricultural tariffs and subsidies. Earlier, the World Economic Forum’s International trade policy coordination. An important transformation of the international Business Council (IBC) of leading CEOs from both monetary system appears to have begun in developed and developing countries had called for a From 2004 to 2006, the Forum and the RBWC revival of the Round. “The impasse with the Doha organized a series of public-private roundtables on which the Group of 20, by virtue of its relatively Round threatens to undermine growth and the spread different aspects of the international financial “ informal and representative nature, may well It has to be more than a lowest-common- “ of economic opportunities to all,” the IBC warned in a architecture in cooperation with selected finance “ prove to be the crucible in which its primary statement. “Trade is the most effective means we can ministries and central banks of the G20. Seven denominator deal that doesn’t generate features are forged. offer to the members of the global community different G20 governments hosted these discussions – trade flows. struggling to lift themselves out of poverty.” co-chairing them with the Forum and the RBWC – Richard Samans Susan Schwab supported by a research programme in which leading Managing Director, World Economic Forum US Trade Representative public, private and academic experts prepared more than 50 discussion papers. “ We are now in the endgame. Either way, this is going to end in success or failure in the next two to three months. It would be a terrible “ misjudgement if we allow what we have now to slip away. Peter Mandelson Commissioner, Trade, European Commission, Brussels 12 | World Economic Forum Annual Meeting 2007 13 | World Economic Forum Annual Meeting 2007
  9. 9. Geopolitics: The Need for Fresh Mandates “ “ We, as representatives of the states, The power equation is becoming a more cannot solve everything alone and complex differential equation. Power is cannot solve anything at all unless we being diffused horizontally and vertically “ rapidly improve our partnerships with to make power more multilevel and “ business, academia and society as a multipolar. whole. Micheline Calmy-Rey Timothy Garton Ash President of the Swiss Professor of European Confederation and Studies, University of Federal Councillor of Oxford, United Foreign Affairs, Kingdom Switzerland The fickle weather in Davos during the week of the The world has a lot on its plate. The global agenda in Meanwhile, the quest for energy security is driving the What this means is that old attitudes and ways of World Economic Forum Annual Meeting was oddly this world of rapid globalization – for good or ill – runs foreign policy strategies of many countries and leading thinking have to be discarded. Ideology-driven, cold appropriate. The initial warmth and lack of snow were long with issues demanding constant attention. to new international alliances. Resource-hungry China war-era approaches can no longer address the more naturally a palpable reminder of global warming, a Among the most pressing: instability in the Middle has been busy forging relations in Africa, and fluid and complex problems of the world. priority issue this year, while the on-off precipitation East, particularly Iraq; communal strife in Africa, elsewhere, to secure its energy needs (see Figure 4), “Perspectives are changing,” said German Chancellor and up-down temperatures that gave way to steady notably Darfur; the threat of terrorism; the proliferation taking a value-neutral, non-judgemental approach that Angela Merkel. “The fact is that a completely new sun on the final day reflected the unpredictability of of materials and weapons of mass destruction; public can be a welcome alternative to countries tired of global balance of power is being created.” East-West, world events and how quickly situations can change. health crises stemming from the spread of infectious hectoring by the West about governance reform and North-South, left-right – the adversarial or competitive As sessions began, participants were digesting US diseases; energy security worries, coupled with the human rights. In addition, the world has awakened to paradigms of the past century no longer apply. President George W. Bush’s announcement in his need for urgent action on climate change; the the threat from rogue states and failed states that Instead, in this age of heightened risks, what is State of the Union address that the US would reduce consequences of the economic and political rise of could become havens for militant extremists. Finally, required to confront the many challenges facing the oil dependency by 20% over the next 10 years. During large emerging markets, including China and India non-state actors both benign and malevolent – from international community is a new pragmatism that is the Meeting, reports that American military forces (emerging markets now constitute half the world committed NGOs and popular bloggers to terrorist based on a willingness to take a fresh look at issues, were targeting alleged Iranian agents in Iraq raised economy); and the struggle to conclude the groups and unknown viruses that could spawn to adopt new ways of governance, to look for concerns about a potential conflict between the US multilateral trade talks. pandemics – have also emerged as influential players. commonalities rather than focus on differences with and Iran. By the traditional farewell lunch on the sunny “The power equation is becoming a more complex other countries, to implement new mechanisms for Schatzalp, many were talking about the decision the The international community must focus on these and differential equation,” said Oxford University Professor cooperation that involve business and civil society, to day before by 30 trade ministers assembled at Davos other problems even as shifts in the geopolitical Timothy Garton Ash. “Power is being diffused institutionalize new power relationships, and to to restart the Doha Round of global trade landscape make it even more difficult to do so. horizontally and vertically to make power more manage a fair rebalancing of the global power negotiations. Consider the arrival of new centres of power, nations multilevel and multipolar.” equation. or regions made influential by commercial clout, Figure 4 Africa's Trade with China energy resources and nuclear capabilities. For In his address at the closing plenary, Tony Blair called “ China has become an important strategic partner example, the renaissance of Asia to a large extent on for just such adjustments that would aim at creating a Insecurity exists everywhere – in the East $25,000 the back of surging economic growth in China and “more muscular” multilateralism. “A key part of our and West. We have to think about common India, each with a population of more than one billion, international dialogue must now be strengthening the 20,000 Trade (US$, millions) goals and looking for the proper solutions in is steadily pulling the geopolitical centre of gravity instruments and institutions – those between 15,000 across the Pacific Ocean. The new power players governments but also those within civic society – that all cultures to find common ground, fight 10,000 “ challenge and, in some cases, constrain US can build capacity,” said the prime minister. “We need extremism and insecurity, and then we may 5,000 dominance. new networks, new relationships between countries hope for a better future. 0 and between people that mobilize the practical means 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 of effecting change.” Blair proposed that the United Mohammad Khatami Exports to Africa Imports from Africa Nations Security Council be expanded, that UN Source: IMF structural and administrative reforms push ahead, that 14 | World Economic Forum Annual Meeting 2007 15 | World Economic Forum Annual Meeting 2007

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