RIP Davos Man, Long Live Globalization

DAVOS, Switzerland – Globalization is not over, you have bypassed the World Economic Forum.

Once upon a time, globalization revolved mostly around the economy: intensification of trade, lower tariffs, outsourcing, and the emergence of multinational brands.

It has been led by the West, financed and endorsed by global institutions such as the World Trade Organization – and presumably. In the glory days of the post-Cold War world, this was the normal, good order of things according to CEOs and political leaders who mingled at the World Economic Forum.

not longer. Today, the political risks are multiplying, and the authority is heading towards decentralization and changing globalization with it.

These tensions were fully on display at Davos this week.

Cryptocurrency companies have taken over the city park with little interest in the official conference program. Ukrainian-themed spaces proliferated in the city, with smiling President Volodymyr Zelensky being the biggest draw of any of the big politicians on the main stage of the World Economic Forum. Governments may struggle to pay off pandemic debts and support the pain of inflation, but good luck finding a World Economic Forum committee on fair tax policy, despite the cries of NGOs.

These multiple versions of Davos spoke through each other rather than the one-way walk of the free market.

At a time when manufacturing supply chains were globalized, they are now often rules and regulations — from ending corporate tax loopholes to enforcing a carbon-neutral future.

“Our perception of risk has expanded,” said Arancha Gonzalez, former executive director of the United Nations International Trade Center and former foreign minister of Spain. “The rule part is going to be just as important as opening the markets. It’s no longer about opening the markets and thinking it’s going to work. It won’t.”

These risks extend from the ongoing global pandemic that has set the world’s agenda for the past two years to the global food crisis that is now threatening mass famine.

It is digital technologies more than finance that underpins what is globalized today – everything from terrorism, hate and disinformation to the proliferation of cryptocurrencies and new streaming services.

The story continues

Certainly, there is concern about fissures in the global economy caused by the Covid lockdowns and the Russian war in Ukraine: A new study by Accenture finds that supply chain disruption could cost eurozone economies more than $1 trillion this year, up to 7.7% of GDP.

There is also a real danger that parts of globalization will stall or fall back in the long run, splitting the world into democratic and authoritarian political blocs, riven by sanctions and tariffs and bolstered by regional internets.

Gonzalez is confident that globalization, while changing, will continue because a world beset by global challenges needs collaborative frameworks. “I don’t see a decrease in interconnection. For me, globalization is an interdependence, and that is increasing, not decreasing.

Former Danish Prime Minister Helle Thorning-Schmidt agrees. “We have to find a way to work with China. We [in democracies] We must find ways to work with countries that do not fully share our values.”

While political concerns about China are growing in democracies, there is no widespread momentum to dramatically change trade relations based on human rights or intellectual property concerns.

British Trade Secretary Anne-Marie Trevelyan told Politico she would continue to raise concerns, but said: “We have a very large bilateral trade relationship with China, and we want our business to continue to grow.”

While Western governments worry about energy supply chains and the rise of China, this does not concern the rest of the world, which often feels marginalized in Davos.

said Kishore Mahbubani, Distinguished Fellow at the Asia Research Institute at the National University of Singapore and an outspoken admirer of the Chinese Communist Party. “Most of the region is trying to integrate with China,” he said.

For Mahbubani, it is clear that “the United States decided to try to prevent China from becoming number one.” But the real danger in this is not a halt in globalization, but rather America’s self-sabotage. “If the United States tries to separate from China, it will break away from most of the region,” he said.

The future is localization

Adam Toze of Columbia University rejected the idea of ​​the end of globalization. “It’s BS ending globalization? “Life as we know it will cease to exist,” he told Politico. “When people say this, they are either naive or horrible,” he said, adding, “It’s a bad way to think about the problem.”

Tooze anticipates “a reconfiguration of globalization, a rearrangement, and in certain respects politicization of certain relationships”.

Alexander Staab, a racy former Finnish prime minister who now leads the European University Institute’s School of Transnational Management, warns of a complex future. He said, “It’s too simplistic to say we’re heading toward some kind of new Cold War, with a liberal world order and an authoritarian world order. I think we’ll have more globalization, but it won’t keep going.”

Instead, the West will need to adjust: “If we want to work for a rules-based system, we won’t necessarily have to set the rules anymore.”

Regional supply chains are here to stay: “More than 90 percent of what we will sell in Europe will be produced in Europe,” says Loic Tassel, European Head of International Operations for Procter and Gamble. And that’s a profound change, which I think will always be.”

Politics matters

The greatest danger to globalization may come from the growing expectation that democratic governments and the corporations that call these countries their home should sever ties with hateful regimes.

A special report on the Edelman Trust Barometer published Monday found that companies are now subject to widespread geopolitical demands: 95% of survey respondents said they expect companies to act in response to the unprovoked Russian invasion by speaking out, applying political and economic pressure or Get out of the aggressor. country market.

“When companies shut down in Russia, they weren’t making that decision about Russia alone,” said Microsoft chief Brad Smith, who argues that pulling out of Russia was a message to all authoritarians, and a tacit acknowledgment that they might be forced to withdraw from other markets.

The World Economic Forum itself was forced to freeze its ties with Russian organizations and executives in March, under political pressure and avoiding litigation over sanctions-busting.

As with other major global corporations, the World Economic Forum must now confront difficult questions about where to draw its ethical lines. Traditionally, autocrats have been welcomed with open arms at Davos. This week, love extended to Hun Sen of Cambodia and Emerson Mnangagwa of Zimbabwe.

But the days of believing that dialogue and open markets lead to democratization are over.

We now know that global economic ties do not lead to political relaxation. And like everyone else, the anointed high priests of globalization cannot avoid redrawing the world order.

The real question is not whether globalization will continue, but whether the market-focused and Western-centric World Economic Forum can evolve with it.

Susan Lynch and Jamil Anderlini contributed to this report.