The annual meeting of the World Economic Forum (WEF) in Davos in January 2018 turned the scanner on some pertinent socio-economic and political topics.
The most prominent among them were the reformation of the capitalist system, developing a global social welfare system based on inclusive economic growth, and boosting business relations between countries to ensure trade balance and long-term economic security.
The meeting also outlined the most pressing challenges impacting the world today, such as poverty, unemployment, social inequality and the management of the shared interests of nations.
Factoring in individuals, countries and institutions around the world, the Global Risks Report 2018, published by WEF prior to the annual meeting, cited several potential threats to the future of humankind, such as climate and natural disasters, cyberattacks, data theft and the failure to address climate change. It also called for a paradigm shift in the prevailing political and economic systems to ensure the greater well-being of the world’s people.
While it is constructive to hold large-scale international gatherings convening public and private sector leaders, world organizations and governments on a single platform, we must first identify the causes that contributed to the bleak report preceding the discussions in Davos.
The coverage of fundamental issues – including increasing poverty, unemployment and lack of access to basic needs, such as healthcare, education, infrastructure, clean water, electricity and transportation – was limited. Furthermore, the report failed to mention the domination of powerful countries over the poor, the lack of economic will of these poorer nations, and the absorption of small, medium and family enterprises by huge economic monopolies.
The previous annual meeting of WEF in 2017 had shed light on social inequality and disparity in science and technology between countries, and addressed poverty and unemployment, however, without any binding outputs for the participants.
It is worth mentioning that this year’s forum encompassed many voices, including my own, that supported the interests of real wealth producers, most of whom get the lowest share of the fruits of their labour.
Pointing out that it is time to renegotiate the social contract, Sharan Burrow, General Secretary of the International Trade Union Confederation, said: "When humanitarian leaders are few and far between, it is too easy to forget the lessons from John Donne’s poem No Man Is An Island. In our increasingly fractured world, ‘any man’s death diminishes me for I am involved in mankind’ seems a poignant call to arms.”
Her statement drives home the fact that the dilemmas faced by the international political and economic systems are structural, not formal, and the solution lies in fixing these systems at the core instead of merely modifying practices.
We must acknowledge the strong dissenting voices regarding WEF’s policies and the manner in which global issues are discussed at its meetings.
WEF findings expect the global economy to grow by about four per cent in 2018. But is it a growth in quality of life, or a growth of capital, investments and the profits of transnational companies?
Unfortunately, the measure of global growth is still limited to the size of each country’s GDP. This approach fails to consider the social impact of growth on key development sectors, such as education, healthcare and services. Instead of measuring the national income of countries that influences their expenditure on these essential sectors, we are measuring the achievements of the economic elite.
Let us begin by changing our concept of growth and vigorously raising awareness of the distinction between GDP and national income or the Inclusive Development Index (IDI). The IDI is based on the notion that most people evaluate the economic progress of their homeland by their household's standard of living – a multidimensional phenomenon that encompasses income, employment opportunities, economic security and quality of life – and not by GDP – the amount of goods and services their country produces.
The size of a country’s GDP largely depends on the performance of companies that operate there and these are often foreign entities. Developing countries have very limited opportunities to invest in these organizations. Foreign investment plays a significant role in contributing to the economies of beneficiary countries and helping them improve their capabilities.
However, if we seek to improve people’s lives across the board, effective synergies between the public sector, private companies and local communities are the way to go.
To achieve reliable results, we need to adopt new growth indicators, such as measuring the social development of each country in relation to its GDP and the number of local jobs created for individuals with varied educational backgrounds.
The indicators must prioritize the interests of vulnerable groups through monitoring wage inequality and CSR practices. Furthermore, CSR and social commitment should be mandatory under licensing and registration laws for domestic and foreign companies. To prevent repeated downturns, the wages received by the employees should be determined by the profitability of the employer.
My analysis of the proceedings at the annual meeting of the World Economic Forum in Davos is not a dismissal of its efforts to address the challenges facing the world, but rather, is an attempt to make them more effective and beneficial to all.
* The author is the Executive Chairman of Investcorp and an International Advisor to the Brookings Instituition. All the views and opinions expressed in the article are solely those of the author and do not reflect those of Times of Oman