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    World Economic Forum Annual Meeting2008 World Economic Forum Annual Meeting2008 Document Transcript

    • World Economic Forum Annual Meeting 2008 The Power of Collaborative Innovation Davos, Switzerland 23-27 January
    • COMMITTED TO IMPROVING THE STATE OF THE WORLD 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 Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 E-mail: contact@weforum.org www.weforum.org © 2008 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 storage and retrieval system. REF: 150208
    • Contents Page 3 Preface Page 4 Executive Summary Page 10 Economics and Finance: Addressing Economic Insecurity Page 14 Geopolitics: Aligning Interests Across Divides Page 18 Business: Competing While Collaborating Page 22 Science and Technology: Exploring Nature’s New Frontiers Page 24 Values and Society: Understanding Future Shifts Page 26 The WorkSpace Page 28 Acknowledgements 1 | World Economic Forum Annual Meeting 2008
    • 2 | World Economic Forum Annual Meeting 2008
    • Preface “The Davos Man and Woman are aware of all the challenges and, in a pragmatic way, they do what they can to mitigate the risks and address the challenges. They also see the opportunities in the world. But if we don’t address the challenges, even the greatest opportunities will not be enough to guarantee the future of humankind.” Klaus Schwab, Founder and Executive Chairman, World Economic Forum Participants in the World Economic Forum Annual The power of collaborative innovation was a most Meeting 2008 convened in Davos at a time of great apt theme for a second crucial reason. It served to anxiety in the world. The turmoil in the financial underline the need for new and imaginative ways to markets and the continuing conflict in the Middle mitigate global risks and the importance of East were naturally of immediate concern. achieving tangible results or value. While some may Mounting awareness of the epochal challenge of criticize us for our continued optimism amidst climate change and the looming threat of global gloom, we must never discard our positive attitude terrorism, two issues that were addressed in the for irrational pessimism. opening plenary session, heightened our shared sense of urgency. We should be neither paralyzed by despair nor casual in our concern. In such times of stress and disquiet, we truly understand the value of the Davos Spirit of This is a time for sincere pragmatism and a new inclusiveness, openness and commitment to brand of collaborative leadership to address the improving the state of the world. The Annual many priorities on the global agenda. We look Meeting theme – The Power of Collaborative forward to continuing our collaboration with Innovation – was a fitting focus for two reasons. Members and Partners at our regional meetings First, it highlighted that a multistakeholder approach and through the many Forum initiatives and is critical for any authentic and viable solutions to industry activities this year. global problems. The World Economic Forum has underscored that, since the first Davos meeting 38 Klaus Schwab years ago, government, business and civil society Founder and Executive Chairman must engage each other to find effective approaches to the most pressing issues. This year, we placed particular emphasis on corporate global citizenship, the principle that companies must be involved in addressing the major challenges we face today, aligning their engagement in society with their business goals. This commitment is at the core of what the Forum stands for. 3 | World Economic Forum Annual Meeting 2008
    • The Power of Collaborative Innovation Executive Summary “In spite of the economic crisis, can we Collaborative innovation is far from the norm in international affairs, not least because the look beyond that and view Davos as a structures of global governance have not evolved collection of minds to address issues for nearly three generations. Nation states, even that can be addressed? My hope is that those working closely together, will not be able to we are here not only with a can-do address future global challenges if business and civil society are not engaged at the outset. In the spirit, but with a must-do spirit.” current context, the World Economic Forum provides a unique platform for multiple stakeholders to address a range of global, regional and industry Indra K. Nooyi, Chairman and Chief Executive Officer, PepsiCo, issues. Fostering collaborative innovation becomes USA all the more critical in a time of heightened Participants in the World Economic Forum Annual uncertainty. Meeting 2008 focused on the tools for addressing the many challenges emerging as a result of the “Globalization is forcing changes in how shifting power equations in the world. The Power of people collaborate in a fundamental Collaborative Innovation is arguably the last remedy to the stresses of intense globalization that have way. You need stronger and stronger been evident in financial market volatility, widening collaborative political leadership. If we income disparities, and in conflict zones around the are interconnected and the world is world. As former British Prime Minister Tony Blair interconnected, the only way for the observed in the closing plenary session: “Globalization is forcing changes in how people world to work is to have a set of collaborate in a fundamental way.” Blair added: “If common values. We have no option but we are interconnected and the world is to work together.” interconnected, the only way for the world to work is to have a set of common values. We have no option but to work together.” Tony Blair, Prime Minister of the United Kingdom (1997-2007); Member of the Foundation Board of the World Economic Forum 4 | World Economic Forum Annual Meeting 2008
    • Among the outcomes of the Annual Meeting: • Japanese Prime Minister Yasuo Fukuda unveiled a five-year, US$ 10 billion fund to support efforts in developing countries to combat global warming – a move to ensure that top priority is given to climate change at this year’s G8 Summit in Hokkaido. In addition, Japan aims to create a new multilateral fund with the US and the United Kingdom to mitigate changes in the earth’s climate as a result of global warming. “I am optimistic about the future. The • The Bill & Melinda Gates Foundation announced question is if the economic growth of a US$ 306 million package of agricultural India and China will slow down if the development grants “designed to boost the global economy slows. I don’t think the yields and incomes of millions of small farmers in Africa and other parts of the developing world so impact on China will be very big.” they can lift themselves and their families out of hunger and poverty”. Wang Jianzhou, Chairman and Chief Executive, China Mobile Communications Corporation, People’s Republic of China • The World Economic Forum, Forum Member companies and the United Nations launched initiatives to facilitate broader and deeper private sector support of humanitarian relief operations. Among the programmes established: Agility, TNT and UPS, three leading logistics and transport • The World Economic Forum launched a landmark companies, are joining forces to help the report on the interfaith dialogue between Muslim humanitarian sector with emergency response to and Western societies. Islam and the West: large-scale natural disasters. Annual Report on the State of Dialogue was the result of in-depth research and polling in more than 40 countries. The report is intended to be an annual global reference on the state of dialogue among faiths that will increase interfaith communication and strengthen efforts to deepen understanding. • The World Economic Forum released the first part of the most comprehensive investigation into private equity: The Globalization of Alternative Investments Working Papers Volume 1: The Global Economic Impact of Private Equity Report 2008. The study focuses on the demography of global private equity deals, the willingness of “There is no time to lose in addressing private equity-backed firms to make long-term investments globally, and the impact of private climate change. We have a readily equity investments on the employment levels of available means of taking action firms in the US and corporate governance in the without waiting for the agreement on a United Kingdom. post-Kyoto framework. It goes without • The Forum’s Global Education Initiative (GEI) saying that aiming at the most efficient designated Rwanda as the launch country for a use of energy is now an obligation pilot programme of the initiative. In partnership upon humanity.” with the Education For All Fast Track Initiative (FTI) under the banner of the Global Education Yasuo Fukuda, Prime Minister of Japan Alliance (GEA), the Forum will provide the platform to combine the strengths of the private sector and foundations to achieve education for all in low-income countries. 5 | World Economic Forum Annual Meeting 2008
    • • Mayors, regional governors and the private sector • The Forum conducted an innovative outreach launched the World Economic Forum’s SlimCity exercise with the online video website YouTube, Initiative, an exchange programme between cities asking people from around the world to answer and companies to support action on resource “The Davos Question” – What one thing do you efficiency in urban areas, focusing on energy, think that countries, companies or individuals water, waste, mobility, planning, health and must do to make the world a better place in climate change. 2008? More than 2 million people took part, and business, government and civil society leaders • British Prime Minister Gordon Brown, Microsoft from the Annual Meeting posted replies. Among Chairman Bill Gates, Irish musician Bono, H.M. those submitting video responses: President Queen Rania Al Abdullah of the Hashemite Shimon Peres of Israel, President Abdoulaye Kingdom of Jordan, United Nations Secretary- Wade of Senegal, President Hamid Karzai of General Ban Ki-moon, World Economic Forum Afghanistan, former US Secretary of State Henry Founder and Executive Chairman Klaus Schwab, A. Kissinger and Irish musician Bono. The Nigerian President Umaru Musa Yar’Adua, and resulting global conversation may be viewed at Cisco Chairman and Chief Executive Officer John www.youtube.com/Davos T. Chambers issued a joint statement vowing to make 2008 a turning point in the fight against • Fourteen global CEOs and company chairmen poverty. The world is facing a “development representing a range of industries and regions emergency”, they said, pledging to “work issued a call to their peers to join collaborative together to help the world get back on track to efforts to strengthen public governance meet the Millennium Development Goals.” frameworks and institutions as a core element of their approach to corporate citizenship. “This is not a great year in the US for far-sighted and imaginative economic The Annual Meeting agenda was organized under policies. We need to activate world five sub-themes – Economics and Finance: Addressing Economic Insecurity; Geopolitics: trade talks and strengthen the global Aligning Interests Across Divides; Business: international system.” Competing While Collaborating; Science and Technology: Exploring Nature’s New Frontiers; and Values and Society: Understanding Future Shifts. Henry A. Kissinger, Chairman, Kissinger Associates, USA 6 | World Economic Forum Annual Meeting 2008
    • World Economic Forum Reaches Millions with the Davos Conversation Ahead of the Annual Meeting, the World Economic Forum In Davos, the Forum set up a special Davos Conversation created the first-ever global video conversation between corner where all participants were encouraged to reply to the general public and the world leaders who were these videos uploaded by the YouTube users, or to simply participating in Davos. By the last day of the Meeting, the answer the Davos Question. Over 110 participants, including Forum reached a worldwide audience of over 7 million with President Shimon Peres of Israel, President Abdoulaye Wade the Davos Question on YouTube. of Senegal, President Hamid Karzai of Afghanistan, musician Bono and actress Emma Thompson along with numerous In the run-up to the Annual Meeting the Forum had asked business leaders used the special video corner to record the Davos Question: “What one thing do you think countries, their messages. Watch the best responses here: companies or individuals must do to make the world a better http://www.youtube.com/view_play_list?p=749732FFD312CA7F. place in 2008?” Nearly 300 people, including some of the Forum’s Members, sent in personal video replies. The best “The Davos Question and the Davos Conversation video were shown during the opening and other selected plenary corner were the embodiment of our Annual Meeting theme: sessions at the Annual Meeting 2008. The topics most often ‘The Power of Collaborative Innovation’,” said Klaus Schwab, included development, economics, education, environment, Founder and Executive Chairman of the World Economic climate change, energy, water, governance, human rights, Forum. The Forum is currently planning to continue the video values and technology innovations. You can check out the conversation with YouTube at some of its regional meetings. best replies on the following website: http://www.youtube.com/profile_favorites?user=thedavosquestion Economics and Finance: Addressing Geopolitics: Aligning Interests Across Divides Economic Insecurity Collaborative innovation is the framework to The unfolding financial crisis should be viewed as a address major global challenges linked to the chapter in a much larger, more profound story – the intensification of globalization. rebalancing of global wealth away from the West and toward the emerging economies of Asia and • The legacy institutions of global governance are the Middle East. not capable of tackling the many interconnected and complex challenges of a multipolar world. • The shift of economic power from West to East is • Collaboration among nation states is not an epochal transformation that is taking place sufficient to address pressing global problems. faster than anticipated. The participation of business and civil society is • The challenge to policy-makers and needed. businesspeople is how to address the more • Climate change is an immediate test of whether a dangerous side effects of global growth such as new brand of collaborative and pragmatic widening income disparities, inflation and leadership can lead to real and lasting results. environmental degradation. • The world is in transition. The US is too strong to • The decoupling of global growth from the US stand on the sidelines, but too weak to go it economy is premature, but there is a new alone. The state is no longer the most important dynamic with the rapid growth of China and other point of reference for many populations. emerging economies shortening and softening • There are global challenges that simply require the US downturn. greater collaboration such as the Doha Round of • Charting a more equitable and sustainable Trade negotiations and the Middle East peace course for global growth will require long-term process. And there are those that will require investments in human capital, education, health greater innovation to solve such as rapidly ageing and environmental protection. societies, urbanization and food security. But the • Greater coordination of macroeconomic policy, most pressing challenges for humankind, such as beyond just the G8, is needed given the limits of climate change, terrorism and non-proliferation traditional monetary and fiscal policy in a global will require both collaboration and innovation. economy. 7 | World Economic Forum Annual Meeting 2008
    • Business: Competing While Collaborating Science and Technology: Exploring Nature’s New Frontiers To survive and prosper in the rapidly evolving global marketplace, companies must win the war for Science and technology are progressing so fast talent and innovate rapidly but also, where that advances are challenging our assumptions appropriate, collaborate - even with the about the human experience. While death remains competition. inevitable, when and how it happens is now less of a mystery. • As worldwide markets reward swift and agile companies, mobile technology has become a • Deeper understanding of the essence of our powerful tool for empowering consumers and individuality, DNA, may help us to be more in connecting customers and clients with product control of our health and lifespan. Meanwhile, the and service providers. finality of paralysis is being challenged by • In addition to shifts in technology, the global developments in neurotechnology and business climate continues to be profoundly regenerative medicine. In addition, advances in affected by shifts in power from developed genetics are providing new weapons against economies to emerging markets including Brazil, cancer. Russia, India and China, which are spawning • These developments are changing the rules of multinational companies of their own that are the labour force, the calculus of healthcare and effectively competing against established our concepts of age, equality and privacy. corporations from the West. • Highly bespoke diagnosis and treatment is • Globalization is decentralizing power, while challenging the traditional assumption that each demographic differentials are heightening the person needs, and is entitled to, a common slate fight for talent. of medical procedures. However, patients and • Web collaboration is distributive; open source doctors fear that people with a genetic results in robustness but not innovation. How to disposition to disease will face discrimination and innovate is less complicated than discovering that employers or insurers might reject them. what to innovate. • While science may decrease our mortality, the • The practice of corporate global citizenship is total cost of healthcare will rise. crucial for a company to succeed in this context. • Businesses are fundamentally altering the way in which they conduct research. They are increasingly relying on collaborative research rather than large-scale integrated research that invents a new technology from top to bottom. 8 | World Economic Forum Annual Meeting 2008
    • Values and Society: Understanding Future The Forum would like to thank the distinguished Shifts Co-Chairs of the Annual Meeting 2008, who led many sessions and provided valuable insights and Globalization’s impact on cultures, societies and wisdom. They were: values must be the subject of deeper, more Tony Blair, Prime Minister of the United Kingdom qualitative analysis. Increasing interconnectedness (1997-2007); Member of the Foundation Board of has not always led to secularization or the World Economic Forum homogenization. Often, in fact, it has exacerbated James Dimon, Chairman and Chief Executive divisions. Officer, JPMorgan Chase & Co., USA K. V. Kamath, Managing Director and Chief • The growth of economic opportunity as a result Executive Officer, ICICI Bank, India of globalization must be combined with a sense Henry A. Kissinger, Chairman, Kissinger of values centred on the notions of justice and Associates, USA freedom to ensure its sustainability over the long Indra K. Nooyi, Chairman and Chief Executive run. Officer, PepsiCo, USA • Burgeoning urban populations place enormous David J. O’Reilly, Chairman and Chief Executive strains on existing infrastructure, particularly in Officer, Chevron, USA Asia and Latin America. Urbanization must be Wang Jianzhou, Chairman and Chief Executive, made sustainable. China Mobile Communications Corporation, • While consuming less is a difficult message in People’s Republic of China much of the world, developing market consumers have the economic motivation to “get more for less” which promotes demand for energy-efficient products. • It is not necessarily faith that brings people into conflict but rather politics and the pursuit of economic and military power, as well as the manipulation of ideology, whether religious or secular. • To foster cross-cultural understanding, public and private learning institutions must work to promote empathy. The Internet can play a critical role in education to bridge divides. 9 | World Economic Forum Annual Meeting 2008
    • Economics and Finance: Addressing Economic Insecurity “If everyone tries to consume the way America has consumed, the world is not US Mortgage-backed Securities Value erosion viable.” US sub-prime mortgage-backed securities prices, by rating* 100 AAA Joseph E. Stiglitz, University Professor, Columbia University, Banks annouce USA 80 write-downs Fed Funds cut 25 bp It might be tempting to lay the blame for the 60 Largest sub-prime A unfolding financial crisis at the feet of bankers like lender declares Two bulge-bracket bankruptcy hedge funds reach creditor settlement Jérôme Kerviel, the young trader whose 40 Central banks Bank misadventures have allegedly cost Société coordinate run on BBB- first liquidity Northern injection 20 Rock Générale US$ 7.3 billion, to castigate the supposed SWF’s begin bail out greed of investment banks or to demonize the Fed Funds of banks cut 50 bp 0 derivatives at the heart of the turmoil. But what Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 became clear during discussions at this year’s * ABX series 06-2. The ABX are credit default swaps based on sub-prime mortgage securities. Source: Thomson Financial; press accounts Annual Meeting was that the sub-prime crisis roiling global financial markets is but a dramatic and costly chapter in a much larger, more profound It may not seem like it to those watching their story - the rebalancing of global wealth away from portfolios plummet, but this trend is not all bad the developed economies of the West towards the news. The rising prosperity of the East is lifting emerging economies of Asia and the Middle East. millions out of poverty and is even spreading to the poorest corners of Africa. The challenge to policy- “When this is over we will wake up and realize that makers and businesspeople as the crisis subsides the issue is that the transformation of wealth and will be how to alleviate the more dangerous side information and industrial activity is taking place at effects of global economic growth – rising inequities a pace none of us has ever experienced,” said within nations and a worsening global environment. Michael S. Klein, Chairman and Co-Chief Executive Climate change has underscored the limits of Officer of Markets and Banking at Citi. Or as development: without dramatic advances in Kishore Mahbubani, Dean of the Lee Kuan Yew resource efficiency and reductions in emissions, School of Public Policy, put it: “We are entering a universal prosperity is environmental suicide. “If completely new era of world history – the end of everyone tries to consume the way America has Western domination. In the Industrial Revolution consumed, the world is not viable,” said Nobel there was a rapid increase in living standards of Prize-winning economist Joseph E. Stiglitz. 50% in one lifetime. In Asia today in one lifetime you will see an increase of 10,000%.” 10 | World Economic Forum Annual Meeting 2008
    • Results of the World Economic Brainstorming The Greatest Threat to Global Growth 1. Recession in the United States 15.90% 2. Greater Income Inequalities 2.20% 3. Rise in Energy and Commodity Prices 5.70% 4. Severe Global Credit Crunch 11.00% 5. Mismanagement of Current Crisis 18.10% 6. Broad-based Collapse of Confidence 16.70% 7. Rise of Protectionism 4.40% 8. Overreaction to the Threat of Recession 7.50% 18.50% 9. Lack of Coordinated Response/Leadership One of the most remarkable features of the current obligations, or CDOs, that allowed lenders to sell crisis is how widely it was predicted. “A year ago their risks on to investors searching for yields, the we said there was an underpricing of risk,” recalled quest for which fuelled a boom in lending to home European Central Bank President Jean-Claude buyers with poor, or sub-prime, credit. Trichet. Indeed, participants at last year’s meeting warned of a bubble in the US housing market and CDOs were repeatedly repackaged and resold to of a worrying proliferation of complex credit investors paying with borrowed funds, creating a derivatives. mountain of leverage that is now collapsing. What was a liquidity bubble has instead become a Underlying the flood of money into mortgage- liquidity crunch as holders of CDOs search in vain backed securities was a tsunami of global capital, for anyone willing to buy or lend. “It’s not mistrust fuelled by growing Asian export earnings that has that other institutions will go bankrupt,” said Walter helped finance America’s swelling debt and kept B. Kielholz, Chairman of the Board of Directors at global interest rates and inflation low. Credit Suisse, “It’s mistrust that if I lend to them they may not lend to me, so I’ll keep my money. This so-called liquidity bubble was good for And that was something that I in my career had emerging economies, providing them with cheap never seen before.” capital to pay off their debts and finance development and trade. The boom in global growth Equity Market Volatility and investment has surpassed the resource Crash of 1987 stands out as the most volatile S&P500 event over the past 55 years industry’s ability to supply it, sending prices for 0.023 commodities soaring. Record prices for oil, metals 1987 Crash 0.021 S&P 500 volatility (12 month std dev) and food have been a boon to nations that export 0.019 Gulf war 2 them. 0.017 9/11 Dot-com Oil crisis 1 0.015 Asian crisis 0.013 Booming markets and easy money also put Cuban Falklands Missile Gulf war 1 Oil crisis 2 Crisis 0.011 pressure on financial managers to take greater Sub-prime Suez Vietnam 0.009 risks, and borrow more money, in search of higher Average 0.007 returns. “If you are in a risk business, one of the 0.005 easiest ways to grow is to leverage up,” observed 0.003 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 James Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co. The industry Source: World Economic Forum responded with innovative collateralized debt 11 | World Economic Forum Annual Meeting 2008
    • predict a US recession, which could lead to a sharp slowdown in demand for raw materials and manufactured exports and with it slower global growth. If that happens, countries and regions with stronger fiscal positions, like China, East Asia and Latin America are likely to be able to cushion themselves better than those with heavy overseas debt, like Eastern Europe. But a sharp debate took place between those who say the world still depends on US demand and those who believe that the emerging markets’ “We are entering a completely new era boom has produced enough momentum that, of world history – the end of Western combined with Europe and Japan, the world is less domination. In the Industrial Revolution reliant on the US. “When the US catches a cold, there was a rapid increase in living maybe the rest of the world catches a sniffle, but certainly not pneumonia,” noted C. Fred Bergsten, standards of 50% in one lifetime. In Director of the Peterson Institute for International Asia today in one lifetime you will see Economics. On the contrary, Bergsten argued that an increase of 10,000%.” the world may experience its first episode of “reverse coupling” in which reasonably rapid growth Kishore Mahbubani, Dean, Lee Kuan Yew School of Public in China and other economies softens and shortens Policy, Singapore the US downturn. Predictably, the sub-prime debacle has sparked calls for regulatory reform, in particular the Perhaps the best indication of the changing harmonization of regulations internationally to balance of economic power, though, is the list of prevent banks from “regulatory arbitrage”. who has been bailing out the big banks wounded “Regulation is fragmented,” said Malcolm Knight, by the sub-prime fiasco. Swollen with revenues General Manager and Chief Executive Officer at the from oil, electronics and public savings, sovereign Bank for International Settlements. “There has to wealth funds have become the latest global be more conformity in the way these regulations financial force, sparking concern that they may are implemented across jurisdictions.” have more than profits in mind as they buy up strategic assets in developed countries. The US Federal Reserve and other central banks are also under scrutiny. Some argue that their Largest Sovereign Wealth Funds efforts to pump liquidity into money markets and Over US$ 2 trillion held by the largest SWFs lower rates to stave off recession are critical to $700 keep the global financial system working. Others 600 say such moves only reward investors for their Assets, 2007 (US$, billions) 500 excesses and encourage continued American 400 profligacy. “The Fed’s attitude is that they are here 300 to clean up after bubbles burst, not prevent them 200 from happening in the first place,” said Stephen S. 100 0 Roach, Chairman for Asia at Morgan Stanley. “This UAE (Abu Dhabi)-ADIA Norway Singapore-GIC Kuwait China-CIC Russia Singapore-Temasek Qatar US (Alaska) Brunei S. Korea Malaysia Venezuela-NDF Canada (Alberta) Taiwan Kazakhstan Chile UAE (Dubai)-Istithmar UAE (Dubai)-DIC Oman is a dangerous and irresponsible and reckless way to run the world’s largest economy.” Now there are concerns that the sub-prime Source: Standard Chartered (2007) mortgage crisis will spread to other credit markets – areas dependent on cash-strapped US consumers such as auto loans, as well as markets Bankers point out that sovereign wealth funds have for other exotic credit derivatives. been ideal investors, taking only small stakes and serving as silent, long-term investors. Moreover, The billions in losses suffered by banks and other their investments help ensure that some of the investors could go so far as to reduce credit money spent on oil and electronics finds its way available to corporations to invest. The real back to the US. Nonetheless, scepticism has question, however, is what impact falling housing emerged about whether the funds’ owners – prices will have on US consumers and the global particularly those that are non-democratic economy. While policy-makers extolled the governments – would refrain from interfering if their resilience of the US economy, many economists national interests were at stake. 12 | World Economic Forum Annual Meeting 2008
    • Sovereign Wealth Funds: A New Development The rising importance of sovereign wealth funds (SWFs) • There is virtually no difference between going to a SWF for investment capital and going to a state received much attention at the World Economic Forum pension fund in the US. Annual Meeting 2008, fuelling concern about their potential political influence. Many agreed that the • If high oil prices continue to channel surplus funds growing financial clout of SWFs – government- into the coffers of the major exporting countries, controlled funds estimated at US$ 2.5 trillion in assets – sovereign investments could reach US$ 15 trillion should be welcomed, not opposed, by global policy- within the next five years. This growth will inevitably make SWFs major players in the global capital makers because: markets. • SWFs represent a valuable pool of stable, long-term capital, and have reduced, rather than increased, “So far as we can see, these investments capital market volatility. have been made on commercial, not • SWFs not only contribute to domestic economic political grounds. We welcome that type stability but to the stability of the global economy as of investment, whether it is from an SWF well. or anyone else.” Robert M. Kimmitt, US Deputy Secretary of the Treasury. of corporate investment and development are not adequate. “The world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well,” said William H. Gates III, Chairman of Microsoft Corporation. “If we’re going to find a sustainable way to help those who can’t pay, we have to use self-interest and caring – capitalism and philanthropy – to direct attention to people who have been left behind.” “When this is over we will wake up and realize that the issue is that the Top Sovereign Wealth Funds transformation of wealth and Perceived levels of transparency and investment approaches vary Strategic information and industrial activity is UAE (Dubai)-DIC Malaysia taking place at a pace none of us has UAE (Dubai)-Istithmar Qatar Investment approach Singapore-Temasek China ever experienced.” Libya Singapore-GIC Michael S. Klein, Chairman and Co-Chief Executive Officer, S Korea UAE (Abu Dhabi)-ADIA Markets and Banking, Citi, USA Brunei Oman Conventional Kuwait Algeria Norway Taiwan US (Alaska) Venezuela-NDF Kazakhstan Ultimately, however, the wealth of exporters alone Chile Canada (Alberta) Russia will not solve the enduring problems confronting the Low Level of transparency High Assets (2007): Over US$ 500 billion global economy. Charting a more equitable and US$ 250-500 billion Commodity fund US$ 100-250 billion Non-commodity fund <US$ 100 billion sustainable course will require long-term Source: Standard Chartered (2007) investments in human capital, education, health and environmental protection. Conventional models 13 | World Economic Forum Annual Meeting 2008
    • Geopolitics: Aligning Interests Across Divides “There is not one challenge in the “The United Nations is often a bystander on geopolitical issues,” said Nandan M. Nilekani, world today that will get better if we Executive Co-Chairman of Indian IT group Infosys approach it without confidence in the Technologies. “The Security Council is still appeal and effectiveness of our ideals – structured with members from 60 years ago. The political and economic freedom, open G8 is still not ready to expand its membership to include the new countries. The World Bank is markets and free and fair trade, human finding that its capital flows are dwarfed by private dignity and human rights, equal capital and it’s time to find a new role in this world. opportunity and the rule of law.” The IMF voting patterns are based on 60-year old rules. The Doha Round of trade discussions has Condoleezza Rice, US Secretary of State been going on for the last 10 years. When we look at every dimension of global coordination we find that there is not enough coordination happening and things are just falling apart.” Collaboration is most certainly the best way to develop effective approaches to these many global To prevent such a breakdown requires collaborative risks. But cooperation among nations will be innovation. In business, “innovation”, strictly insufficient if the responses involve obsolete tools of speaking, is the turning of a concept into diplomacy and statecraft – commissions that report commercial value. Applying innovation in but do not act, resolutions and declarations with no geopolitics is the turning of an idea – a new policy bite, international protocols that major powers or approach – into valuable results, or viable refuse to sign, or multilateral organizations which solutions. “The power of collaborative innovation,” key nations can opt out of or undermine with a said former British Prime Minister Tony Blair in veto or refusal of funding. The global governance advance of the Annual Meeting, “is the answer to institutions that exist today are legacies of the post- all the big global challenges we are facing.” World War age and the cold war era. They are not equipped to tackle the challenges of a multipolar The linkages among issues means that any world, are simply too weak, or are hobbled by the effective approach to a problem will require action burden of lowest denominator consensus. across several fronts and by many actors including business, civil society and citizens. Nobel Peace 14 | World Economic Forum Annual Meeting 2008
    • “Water is today’s issue; it is the oil of It was in the series of sessions on water, particularly the WorkSpace session, that the urgent this century.” need for collaborative and innovative approaches was most evident. Ignorance of the many problems Andrew N. Liveris, Chairman and Chief Executive Officer, Dow Chemical Company, USA associated with water supply in the world and inaction are already having severe consequences – conflict, malnutrition, displacement, disease and death. “Water is today’s issue; it is the oil of this Prize laureate Al Gore and Irish musician Bono century,” warned Andrew N. Liveris, Chairman and made this point as they underscored the Chief Executive Officer of Dow Chemical Company. connection between climate change and poverty. Added UN Secretary-General Ban Ki-moon: “Too Gore argued that individual actions to conserve often where we need water we find guns instead.” energy were not enough to deal with the climate crisis. “They’re important and making changes of Per Capita Water Consumption Worldwide those sorts can build a political consensus,” he explained. “But, in addition to changing the light Per capita water consumption rising in both developed and developing countries bulbs, it is far more important to change the laws 60 and the treaty obligations that nations have.” 50 Cubic metres per person per year Many government leaders at the Annual Meeting 40 including Blair stressed that the Israeli-Palestinian 30 conflict and the stability of the Middle East is not simply a matter for politicians and diplomats. It 20 impinges on the rest of the world because of its 10 motivational link to global terrorism and its impact 1995 2025 1995 2025 on energy markets. The international business 0 Developed countries Deveoping countries community obviously needs to support the peace Source: IFPRI and IWMI, quot;Global Water Outlook to 2025: Averting an Impending Crisisquot; (2002) process for it to succeed. 15 | World Economic Forum Annual Meeting 2008
    • But is the new brand of leadership – the kind that is At the Annual Meeting, geopolitical collaborative focused on finding collaborative and innovative innovation was very much on display in the ASEAN solutions – for real? To be sure, we have seen the session, with three heads of government, six application of collaborative innovation in the past. ministers and the organization’s secretary-general The creation of the UN peacekeeping forces, the on the Congress Hall stage. It was a bold establishment of the International Criminal Court, statement by 10 disparate countries that, while the conclusion of landmark conventions such as they may have different cultures, traditions and the Law of the Sea and the global banning of histories, and while they may have even fought landmines were collaborative innovations in their each other on the battlefield, they share a common time. Today, it is critical to apply collaborative future. Indeed, they must – and not just because by innovation to even bigger geopolitical challenges. joining forces in an ever-closer union they become a more powerful market or a more attractive Two immediate tests of whether this concept is destination for foreign direct investment, but more than a Davos ideal are the challenges of because only by banding together can they fully concluding a post-Kyoto international framework and effectively address the multiple risks that for mitigating global warming and resolving the threaten the future of their people. Israeli-Palestinian conflict by the end of this year. It is far from clear that these two goals can be And it is not just nation states that have to sit at the achieved. What is clear is that nations are table. In session after session, the message of beginning to understand that business as usual is inclusiveness was clear: business and civil society simply unacceptable. “Globalization is forcing must join with government. The only way for the changes in how people collaborate in a ideal of collaborative innovation to be a reality – as fundamental way,” said Blair. “You need stronger it must be – is for the international community to and stronger collaborative political leadership.” The set common values to underpin a globalization that “good news” is this, he concluded: “If we are is fair and just. interconnected and the world is interconnected, the only way for the world to work is to have a set of A group photo in Davos said more than any of the common values. We have no option but to work statements the assembled public figures gave in together.” support of the renewed push by the United Nations 16 | World Economic Forum Annual Meeting 2008
    • Securing Water for the Future Water emerged as one of the dominant themes at the World The resource is often wasted because it has no economic Economic Forum Annual Meeting 2008. No individual, firm or value, despite being the most precious and scarce resource nation can escape the consequences of water scarcity. of all, said Peter Brabeck-Letmathe, Chairman and Chief Executive Officer, Nestlé, Switzerland. “If we allow market “The challenge of securing safe and plentiful water for all is forces to play a role in how to define the value of water, we one of the most daunting challenges faced by the world could take a big step forward.” today,” said UN Secretary-General Ban Ki-moon. He told leaders in Davos that water stress poses a risk to economic Efforts to extract more and alternative energy sources such growth, human rights, health, safety and national security, as shale oil or biofuels only speed the depletion through their and that water shortages can lead to conflict, such as in own requirements for water. But, it was suggested that Darfur and other parts of the world. market forces could work well under a cap and trade approach similar to those applied to carbon dioxide. Many participants, however, agreed that the water challenge could be solved, using collaborative approaches, political will, market mechanisms and innovative technology like those which arose in response to global warming. to achieve the Millennium Development Goals Cynics and devotees of zero sum diplomacy may (MDGs). Together with UN Secretary-General Ban dismiss the idea of collaborative innovation as Ki-moon stood Nigerian President Umaru Musa simplistic or naïve. Certainly, the power of this Yar’Adua, British Prime Minister Gordon Brown, approach will be tested in a world where recidivism H.M. Queen Rania Al Abdullah of Jordan, Microsoft lingers. At the Annual Meeting, formidable voices Chairman and global philanthropist Bill Gates, Irish spoke of the residual ills of colonialism and took a musician Bono and Cisco Systems Chairman and hard line on the enmities of a bygone age. History, CEO John T. Chambers. This creative coalition, of course, cannot be denied. But if the state of the they declared, was necessary to reinvigorate the world is to improve, then those truly committed to international community’s flagging campaign. “The improving it cannot waste time eschewing the balm goals look like they’re not going to happen, and the of forgiveness for the false satisfaction of revenge G8 commitments made in 2005 look like they will and the easy languor of dwelling on past injustice. not come off,” Bono complained. “This is a Instead, to forge ahead, as South Africa did after scandal.” the end of apartheid, they should pursue truth and reconciliation – collaborative innovation at its finest. This unprecedented gathering to rally the international community was emblematic of the new geopolitics that globalization has spawned. The greater interconnectedness of the world has begotten a host of interconnected problems that the old nation-state model was never meant to deal with. Climate change, terrorism, regional conflict and the rapid spread of infectious diseases are only some of the modern global challenges that require multiple approaches and the attention of multiple actors. As the problems have expanded in scope, so too have the number of players needed to tackle them. 17 | World Economic Forum Annual Meeting 2008
    • Business: Competing While Collaborating “We’ve been talking about the mobile In short, worldwide markets reward swift and agile companies, and those that win the race for talent Internet and mobile stuff for a very long and customers must be responsive to both. To be time. And it’s obvious that with 3 billion truly responsive, corporations must be good as well people and hundreds of millions of very as great. high-end mobile phones, that there’s Mobile technology is changing the way businesses going to be a huge revolution.” interface with customers, and the way customers interface with one another. In China, home to the Eric Schmidt, Chairman of the Executive Committee and Chief Executive Officer, Google, USA world’s largest mobile network, this is particularly true. “On New Year’s Day, we had about 5 billion SMS New Year’s greetings,” said the man who runs French poet Paul Valéry might have been the network, Wang Jianzhou, Chairman and Chief forecasting for today’s multinational corporation Executive, China Mobile Communications when he said that “the trouble of our times is that Corporation. the future isn’t what it used to be.” New mobile communications technology and Internet Worldwide, mobile phone owners total 3 billion and advertising are revolutionizing the way business is may reach 4 billion in the next four years. “We’ve done. Economic power is shifting away from the been talking about the mobile Internet and mobile West, and corporations in other parts of the world stuff for a very long time. And it’s obvious that with are emerging as new champions. To survive and 3 billion people and ... hundreds of millions of very prosper in the rapidly evolving global marketplace, high-end mobile phones, that there’s going to be a companies must win the war for talent, innovate huge revolution,” said Eric Schmidt, Chairman of rapidly, but also, where appropriate, collaborate the Executive Committee and Chief Executive effectively. Good corporate citizenship will also Officer of Google Inc. attract customers, especially if such citizenship underpins business models themselves. A parallel technological revolution is taking place in advertising, with Internet and mobile ads surging 18 | World Economic Forum Annual Meeting 2008
    • and traditional television ads waning. The future is adequate skills training for the future. It must also particularly bleak for old print advertising, but viral address the needs of the half of the Indian marketing continues to grow as a cost-effective population that survives on less than a dollar a day. alternative. Research is needed to determine what types of Internet advertising work best. Globalization is decentralizing power, a trend visible not just in the shift away from the West, but also in In addition to shifts in technology, the global the shift of influence away from CEOs and towards business climate continues to be profoundly customers and employees. To survive and prosper, affected by shifts in the location of power. The successful multinationals must be ready to emerging markets of Brazil, Russia, India and China collaborate effectively. are drawing huge capital investments, and have spawned innovative multinational corporations that The world is currently undergoing a demographic compete on an even footing with established shift that amounts to an earthquake for business. companies from the developed world. “We were With much of the planet experiencing a youth bold, we were passionate in what we believed, we bulge, rates of mortality and fertility are falling in the persevered, we were committed, and underpinning developed world, with average life expectancy all of that was a sound business strategy,” said one projected to reach 100 by the end of the century. In such new champion, Aditya Mittal, Chief Financial Europe, talent is increasingly mobile and thus tough Officer of ArcelorMittal Limited and Young Global to retain: employees between the ages of 25 and Leader. 34 spend an average of just 2.9 years in a job. In Africa, a surplus of workers is driving immigration to India in particular holds the potential for the north. tremendous growth. Since reorienting from a command economy to one driven by To retain talent, management must demonstrate entrepreneurship, India has given birth to countless empathy for its needs and create attractive innovations, and Indian corporations have scaled workplaces. Corporate boards must be diverse, up their research and development budgets and CEOs must be able to manage across political exponentially. However, for India to sustain its and cultural boundaries. Increasingly this means growth over the long term, it must make sure that recruiting leadership from countries outside of the 550 million of its citizens under age 24 have Europe and North America. 19 | World Economic Forum Annual Meeting 2008
    • “There has been a massive shift in Foreign-born CEOs power to the consumer.” One-third of FTSE 100 CEOs were born outside of the UK Mark G. Parker, President and Chief Executive Officer, Nike, 35% USA 30 foreign-born, as of 12 Dec 2007 Percentage of CEOs who are 25 20 networks are islands,” said Schmidt, while “an 15 open Internet produces more content, more users, 10 more revenue, more competition, more choices, 5 more growth.” 0 FTSE 100 (UK) CAC 40 (France) Xetra Dax (Germany) Fortune 100 (US) The world’s top 1,250 companies spent 10% more Source: New York Times; London Chamber of Commerce and Industry; press reports; company websites on research and development in 2006 than they did in 2005; but most innovation now comes Customers are also enjoying more clout than ever, through collaboration with employees, customers as businesses vie to learn from, and respond to and business partners. Still, the growing open their needs. “There has been a massive shift in source community must not mean a total erosion of power to the consumer,” said Mark G. Parker, intellectual property rights. Excessive IP regulation President and Chief Executive Officer of Nike. “And will stifle growth; but forehanded policies that the other thing that’s changed is the relationship nurture future innovation rather than protect past isn’t just a company like Nike just communicating methods will make happy shareholders. out to a consumer; it’s a dialogue.” Finally, shareholders also respond to prudential In an economy where a knowledge base is corporate global citizenship, and companies that increasingly replacing a manufacturing base, and succeed must be good as well as great. By where the Internet is breaking down corporate partnering with governments and civil societies and walls, collaboration also means sharing information. working within core competencies, companies can “We have to fundamentally decide whether you greatly benefit societies and improve their bottom want closed networks or open networks: closed lines. One Edelman study of 5,000 consumers in 20 | World Economic Forum Annual Meeting 2008
    • 2008: “Make or Break” Year for Doha Trade Talks nine countries found that 70% would pay more for a socially or environmentally responsible brand. But After more than six years of stop-start such responsibility must be integrated into the negotiations, the Doha talks between members essence of the companies - and emblazoned in the of the World Trade Organization (WTO) have hearts of its employees - for it to resonate with ground to a halt. With less than a year before US consumers. President George Bush leaves office and with fears growing of a global economic recession, time is may be running out for reaching an Stakeholders' Impact on Corporate Responsibility agreement to reduce tariffs, subsidies and CEO Survey: Which of the following stakeholder groups have/will have the greatest impact on the way your company manages societal expectations? promote freer and fairer trade. 60% Despite important progress on technical issues 50 Percentage of respondents over the past six months, trade experts at the 40 Next 5 years Now World Economic Forum Annual Meeting 2008 30 said that WTO members remain no closer to an agreement. In particular, concerns persist among 20 developing countries that lower tariffs will unfairly 10 expose poor rural farmers to global competition 0 and jeopardize growth that would be a potential Employees Consumers Governments Local communities Regulators Media/opinion leaders NGOs Boards Investment community Organized labour Suppliers buffer against a global slowdown. Not reaching a deal in 2008 would “give the wrong signals to Note: Respondents could select as many as three stakeholders the global economy. And this will be detrimental Source: Feb 2007 McKinsey survey of 391 CEOs whose companies participate in the UN Global Compact to everybody, most of all the developing economies,” said Celso Amorim, Minister of Foreign Relations of Brazil. “It’s not what you do with your money after you’ve earned it that matters,” said H.M. Queen Rania Al Failure in the Doha Round would also likely Abdullah of the Hashemite Kingdom of Jordan, a increase protectionist pressures around the Member of the Foundation Board of the World world and result in a rollback from the progress Economic Forum. “But it’s how you’ve earned the already made towards freer global trade. Pascal money that determines your success and your Lamy, Director-General, World Trade value added to society.” Organization (WTO), Geneva, said a failure in the talks could exacerbate the impact of a slowing global economy and heighten geopolitical tensions. 21 | World Economic Forum Annual Meeting 2008
    • Science and Technology: Exploring Nature’s New Frontiers We are born, we die. For the duration of our lives, In practical terms, these developments are sure to we share this assumption about our common have a profound impact, altering the rules of the mortality. We plan our affairs and measure our labour force, the calculus of healthcare, our success against a traditional lifespan - career, concepts of age, of equality and of privacy. They marriage, children, retirement. Our universal frailty will eventually force us to consider what the human binds us, rich and poor, to the knowledge that at body is and what constitutes a full life. If nothing some point we all get sick and perish. We just else, science is outpacing the public’s ability to don’t know how. Or when. understand its accomplishments and weigh the implications. But in a series of off-the-record discussions with top scientists, participants at the Annual Meeting The finality of paralysis, for example, is being heard about how science is progressing so fast challenged by developments in neurotechnology that it is challenging our assumptions about the that link the brain directly to machines. Once, a human experience. Death remains inevitable, but severed spinal cord was irreparable. But by the when is being pushed out by advances in implanting electrodes in the brain, doctors have medicine. The how, too, may now be less a been able to allow at least one paraplegic to mystery than a probability. By unravelling the very operate a robotic arm and surf the Internet with essence of our individuality, DNA, we may be able only his thoughts. Cochlear implants can now to forestall the inevitable, cheat death and alter restore hearing in many people. Deep brain what we once simply accepted as grim fate. stimulators are being used to treat epilepsy and Parkinson’s disease. Retinal prostheses have been used successfully to restore sight. Major Causes of Death Chronic diseases account for 60% of fatalities worldwide* Such developments hold out the possibility that IDS robotic limbs could be controlled by the wearer’s ia lar HIV/A is ulos Ma brain to restore natural motion. Advances in Infectious erc diseases Tub bioengineering are already creating prostheses that Heart disease allow almost natural movement, and even let their Other wearers regain the ability to feel pressure and weight. Soon, artificial legs will not only allow patients to walk on the beach, but to feel the sand Chronic diseases beneath their feet. New biomaterials could allow Cancer Injuries doctors to regrow nerves entirely. Other tes Diabe * segment sizes indicate the share of world fatalities in 2005 Source: WHO 22 | World Economic Forum Annual Meeting 2008
    • serve in a role akin to Hollywood producers, Forecast Avoidable Costs of Chronic Disease assembling different scientific actors and specialists In the US, the avoidable indirect impacts (ie, productivity losses) to crack a specific medical problem. of chronic disease are four times as high as the direct costs $500 The concept of personalized diagnosis and 400 Avoidable costs (US$, billions) treatment also challenges the traditional assumption that each person needs, and is entitled 300 to, certain common medical procedures. They also 200 pose a problem for conventional healthcare impacts Indirect systems, which rest on democratic principles of 100 equality – the expectation that all citizens should be Direct costs treated the same. The value of genetic analysis lies 0 Cancer Heart Hypertension Mental Diabetes Pulmonary Stroke Disease Disorders Conditions in the fact that one patient should not be treated Note: Avoidable costs are those that could be eliminated by reasonable improvements in behaviour and treatment. Direct costs like another. are treatment costs. Indirect impacts are losses in output due to absenteeism, “presenteeism” and other productivity reductions Source: The Milken Institute, “An Unhealthy America: The Economic Impact of Chronic Diseasequot; (2007) Patients and doctors fear that people with a These developments hold out hope to accident genetic predisposition to disease will face victims, paraplegics and amputees, as well as to discrimination, that employers or insurers might victims of diabetes and strokes. Some wonder, reject them. Genetic revelations also present however, how long it will be before synthetic body another ethical dilemma: whether the knowledge of parts become part of the cosmetic surgeon’s a likely illness will improve one’s quality of life. Does arsenal, allowing us to enhance not only our informing a patient they are likely to develop an appearance but also our performance. incurable and fatal disease within the next decade help them? How will it affect their role in society? Advances in genetics, meanwhile, are providing new weapons in the fight against cancer. Science may ensure our lives are longer, but will Biomarkers can now be used to identify individuals they necessarily be fruitful? By decreasing our at risk and treat them. By exploring the genome, mortality, the total cost of healthcare will rise. As we scientists expect to uncover the primary reasons are better able to prevent and bounce back from for virtually all common diseases within the next five acute injury and disease, health systems will need years. Using their understanding of the genome, to shift attention to the rising cost of chronic scientists are compiling a cancer genome atlas that diseases such as diabetes, obesity and other identifies which genes control susceptibility to lifestyle-related diseases like lung cancer. certain cancers. Researchers have already Governments are already stepping in to limit factors identified genes that control the risk of adult-onset contributing to chronic disease: banning smoking, diabetes, asthma, breast cancer, hypertension, for example, or unhealthy foods. New York City macular degeneration, prostate cancer and heart monitors diabetics’ blood-sugar levels to reduce disease. treatment costs, while Japan plans to require yearly medical checkups for citizens over 50. The burden Greater understanding of genetics promises to of chronic disease is so large, many say, that it revolutionize medicine, allowing doctors to develop could alter cultural traditions about which therapies that pinpoint afflicted areas - even behaviours are private and which are the concern individual cells in the body. Genetics already make of society at large. Medicine may become more it possible for physicians to compile treatments personalized, but your health will become a matter tailored to each patient - “genomic medicine”. An of public interest. account of the medically significant genes in a person’s DNA is now available for about US$ Public and Private Health Expenditures 1,000. Healthcare spending was over 15% of GDP in the US in 2004 Insurers and regulators expect that such Health expenditure as a percentage of GDP, 2004 16% individualized treatments will save them money, even though they are likely to cost individual 12 patients much more. Genomic medicine also poses a challenge to the conventional model for drug Private 8 discovery and development: clinical trials for a Public market of one are impossible and lack the scale 4 companies need to justify investing in developing such treatments. Scientists say this is likely to force 0 profound changes to the pharmaceutical industry, China India Japan France US perhaps favouring smaller companies that can Source: WHO 23 | World Economic Forum Annual Meeting 2008
    • Values and Society: Understanding Future Shifts “Very often, it is not faith which brings For many, principles continue to be defined by faith. us into conflict. It is politics and the “You can’t really have modernization without pursuit of economic and military power, values,” said Theodore Cardinal McCarrick, and the violent reactions they produce. Archbishop of Washington DC (2001-2006). “And where do the values come from? They come from It is often the manipulation of ideology, our religious traditions.” While some in the 20th whether religious or secular.” century predicted a secular future, today the opposite is true, with adherents to Islam and Abdullah Ahmad Badawi, Prime Minister of Malaysia Christianity comprising over half of the world’s Shifts happen - but some shifts are easier to see population. And while strife in the Middle East than others. We frequently study globalization dominates headlines, war is not a necessary by- through such measurements as trade, capital flows product of religious pluralism. “Very often, it is not or labour movements. But globalization’s impact on faith which brings us into conflict,” said Abdullah cultures, societies and values calls for a much Ahmad Badawi, Prime Minister of Malaysia. “It is deeper, more qualitative analysis. While some argue politics and the pursuit of economic and military that the global marketplace tends to whitewash power, and the violent reactions they produce. It is regional differences, increasing interconnectedness often the manipulation of ideology, whether religious between cultures has not always lead to or secular.” secularization or homogenization. Often, in fact, it has exacerbated divisions. For the next century to To foster cross-cultural success, both public and be one of peace and prosperity, societies must private learning institutions must promote empathy adapt to such trends as urbanization, and adopt and understanding. The Internet represents the new paradigms for intercultural relations, education greatest change, and holds the greatest and even nutrition. educational potential, as an increasing number of students in the developed world are graduating The danger lies in a situation where this does not with degrees from online programmes. The new happen, and “people see globalization as technology provides great hope for democratizing something done to them rather than something access to education. But for the bottom billion that, if it is guided by the right value system, worldwide, with no access to the Internet, even actually can bring about a more just world,” said primary education is out of reach. Today, 800 former British Prime Minister Tony Blair. “And so I million adults cannot read, and over 200 million think you have got to combine this economic children toil in the workplace rather than study in a opportunity with a sense of values that are around school. Government, business and civil society notions of justice as well as notions of freedom.” share a collective burden to ensure that no child, anywhere in the world, is left behind. 24 | World Economic Forum Annual Meeting 2008
    • “There is no contradiction between City Economies in 2010 modernization and faith if they are Eight cities join the ranks of urban economic powerhouses, half from the US and half from developing countries rooted in values.” Mahdi Hadavi, Founder and President, Porch of Wisdom Cultural Institution, Islamic Republic of Iran Urbanization must also be made sustainable. If the world is to stem the effects of climate change, then cities must lead the way. Already, 786 mayors have signed a “local” Kyoto Protocol, pledging to reduce carbon emissions by 20%. Some mid-sized cities Estimated GDP (US$, 2005, PPP) >US$1 trillion have outpaced megacities in their reforms. San US$ 500 billion - 1 trillion 2005 2010 2015 2020 US$ 250 billion - 500 billion Francisco, for example, now boasts a recycle rate Source: quot;Which are the largest city economies in the world and how might this change by 2020?quot;, PricewaterhouseCoopers of nearly 70% on all waste products. Other cities are aiming to enhance public transportation and Worldwide, the most striking societal shifts are have begun offering incentives for clean and happening around urban areas. Today, over half the efficient energy sources. world lives in a city; by 2050, the fraction is expected to top three-quarters. Making urban Global food chains are also evolving in tandem with environments safe and sustainable requires not only the urban landscape. New tastes, menus and diets enlightened leaders but also a supportive private are pushing local food manufacturers into sector and mobilized citizenry. unsustainable monocultures. New consumer trends burden not only national healthcare systems, but, Burgeoning urban populations place enormous through its supply chain, ecological systems as strains on existing infrastructure, particularly in Asia well. Certain distributors are partnering with small, and Latin America. “If we think the situation is bad local farmers to provide healthy products through now,” said Terry Hill, Chairman, Arup Group of the sustainable agriculture. But consumers must vote United Kingdom, “we should think about what is for those products with their forks, if they are to coming. Every city we know is experiencing stress make the new supply chains viable. on its infrastructure, yet everyone wants to live in a city.” Public and private sectors must work together Overall, while societal shifts brought on by to provide upgrades, understanding that a road is globalization may seem beyond our control, we can not just a project but also a means to foster manage change by adhering to a common set of accessibility, a hospital not just a cost but also an underlying principles. “Globalization is a fact,” investment in a healthy society. concluded Blair, “but the values that govern it are a choice.” 25 | World Economic Forum Annual Meeting 2008
    • WorkSpace The The WorkSpace – the workshop with a difference – draws out the collective intellect and creative capabilities of participants to explore concrete opportunities for improving the state of the world. The WorkSpace put the Annual Meeting theme – The Power of Collaborative Innovation – into action. Participants collaborated to find new ways of tackling some of the most critical issues on the global agenda for 2008. 26 | World Economic Forum Annual Meeting 2008
    • Below are insights from just four of a series of sessions in the WorkSpace. To view all photos, graphics and summaries from the WorkSpace at the Annual Meeting 2008, visit www.weforum.org/annualmeeting/workspace. 27 | World Economic Forum Annual Meeting 2008
    • Acknowledgements The World Economic Forum would like to thank its Strategic Partners for their valuable support of the World Economic Forum Annual Meeting 2008: ABB E*TRADE FINANCIAL Reuters ABN AMRO Bank Electricité de France (EDF) Roland Berger Strategy Accel Partners Emirates Group Consultants Accenture Ernst & Young Saudi Basic Industries Alcoa Fluor Corporation Corporation (SABIC) AMD Forbes Siemens American International Group Goldman Sachs Silver Lake (AIG) Google SK Group Apax Partners Heidrick & Struggles Standard Chartered ArcelorMittal HP Swiss International Air Lines AT&T HSBC Swiss Re Audi Infosys Technologies Travelport Avaya Intel Corporation UBS Bahrain Economic Development Investor Unilever Board JPMorgan Chase UPS Bain & Company KPMG VimpelCom Barclays Capital Kudelski Group Volkswagen Basic Element Lehman Brothers VTB Bank Bombardier Lenovo WPP Booz Allen Hamilton McKinsey & Company Xenel Group The Boston Consulting Group Manpower Zurich Financial Services BP Marsh & McLennan Companies BT (MMC) Burda Media Merck & Co. CA Merrill Lynch Cerberus Capital Management METRO Group Chevron Corporation Microsoft Corporation Cisco Systems Morgan Stanley Citi Mubadala Development Clayton, Dubilier & Rice Company Clifford Chance NBC Universal The Coca-Cola Company Nestlé The World Economic Forum Credit Suisse Nike would also like to thank Dogan Deloitte NYSE Euronext Holding, Dogus Group, Invest In Deutsche Bank The Olayan Group France Agency, Koç Holding, Deutsche Post World Net PepsiCo Sabance Holding and Swarovski Dubai Holding PricewaterhouseCoopers for their support. Dubai World Reliance Industries DuPont Renault-Nissan 28 | World Economic Forum Annual Meeting 2008
    • 29 | World Economic Forum Annual Meeting 2008
    • Contributors W. Lee Howell is Senior Director, Head of Asia and Global Agenda. Sheana Tambourgi is Director, Head of Annual Meeting Team. Stephanie Janet is Director, Head of Annual Meeting Operations. Stéphanie Nassenstein is Senior Team Coordinator, Global Agenda. The report writers were Wayne Arnold, Alejandro Reyes and E. Benjamin Skinner. The Annual Meeting Programme is prepared by Irene Casanova, Economics; Nathalie Cerutti, Faculty Management; Agustina Ciocia, Global Competitiveness; Lena Hagelstein, Geopolitics; Paola Hjelt, Values, Arts and Culture; Nour-Eddine Iguimdrane, WorkSpace; Jasmin Lamrani, Partnering Against Corruption; Emma Loades, WorkSpace; Kali Galanis, WorkSpace; Dorothée Ozzello, Public-Private Partnerships; Pearl Smandari, Global Competitiveness; Tiffany West, Business; and Christian Zellner, Science and Technology. Associate Director, Editing: Nancy Tranchet Design and Layout: Kamal Kimaoui, Associate Director, Production and Design Photographs by swiss image.ch and Richard Kalvar/Magnum Special thanks to PricewaterhouseCoopers for their help in preparing data and statistics underpinning this report. The World Economic Forum would like to express its appreciation to the summary writers for their work at the Annual Meeting 2008. Session summaries are available at: www.weforum.org/annualmeeting/summaries2008 30 | World Economic Forum Annual Meeting 2008
    • This publication is also available in electronic form on the World Economic Forum website at the following address: www.weforum.org/pdf/summitreports/am2008 The Report is also available as a PDF at: www.weforum.org/pdf/summitreports/am2008.pdf Other specific information on the World Economic Forum Annual Meeting 2008 can be found on the following links: Annual Meeting www.weforum.org/annualmeeting Annual Meeting Programme www.weforum.org/annualmeeting/programme Davos Conversation www.weforum.org/davosconversation Davos Question www.youtube.com/davos Interviews www.weforum.org/annualmeeting/interviews Knowledge Concierge www.weforum.org/annualmeeting/knowledgeconcierge Open Forum www.weforum.org/openforum Partners www.weforum.org/annualmeeting/partners Photographs www.flickr.com/photos/worldeconomicforum/sets Press releases www.weforum.org/pressreleases Session Summaries www.weforum.org/annualmeeting/summaries2008 Webcasts, Podcasts & Vodcasts www.weforum.org/annualmeeting/webcasts WorkSpace www.weforum.org/annualmeeting/workspace 31 | World Economic Forum Annual Meeting 2008
    • 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)