World Economic Forum : “Operating System Upgrade” Needed to Renew Globalization, Avoid Future Crises
– Concerted action by the world’s leading economies a decade ago helped avert financial catastrophe, but challenges to cooperation since then have left the global economy increasingly vulnerable to new crises
– Following discussions in Davos, and 10 years on from the London G20 Leaders Summit, the World Economic Forum today issues a call to strengthen and supplement the global multilateral system
– New white paper presents a model for delivering an ‘operating system upgrade’ for international cooperation and key areas of domestic governance as well as 100 examples of promising innovations that would strengthen governance across trade, finance, environment, technology, cybersecurity, domestic corporate governance and labour policies
The World Economic Forum today calls for a global public-private campaign to strengthen and modernize international cooperation and two key areas of domestic governance.
The call for engagement comes two months after the World Economic Forum Annual Meeting and 10 years to the day since the London G20 Leaders Summit, when concerted global action was credited with helping avert a deeper and more protracted global economic crisis.
In a new white paper, Globalization 4.0: Shaping a New Global Architecture in the Age of the Fourth Industrial Revolution, the Forum argues that major shifts underway in technology, geopolitics, environment and society are combining to give birth to a new phase of globalization – Globalization 4.0 – whose trajectory will depend in large part on how well governance at multiple levels – governmental, corporate and international – adapts to these changes.
The emergence of these four transformations as driving forces of Globalization 4.0, the paper argues, calls for a new approach by governments, companies, civil society institutions and citizens to strengthen and modernize international cooperation and domestic governance. The paper also urges leaders to heed the lessons of 2009 and work together now rather than become complacent about the gaps in national and global governance that accumulated as a result of changes in technology, markets and macroeconomic conditions, which ultimately led to the global financial crisis of 2008-2009.
A new era for global governance
In the run-up to the 75th anniversary of the United Nations and Bretton Woods institutions in 2020, the Forum seeks to inspire engagement by facilitating a year-long process of dialogue in cooperation with other institutions. The white paper is intended to help concretize these discussions and place them in systemic context. Drawing on discussions and consultations undertaken on its platform before, during and after the World Economic Forum Annual Meeting in Davos in January, it presents:
– 8 general design specifications of effective international cooperative architecture and domestic governance in this new era
– 100 architectural innovations – existing initiatives and proposals embodying these specifications that would go a long way towards modernizing and strengthening the effectiveness of institutions and arrangements in such areas as trade, finance, environment, technology and cybersecurity, as well as domestic corporate governance and labour policies
These are presented to raise the level of ambition and appreciation of the impressive array of practical opportunities for progress that are available and mainly awaiting wider support. Nearly 60 multilateral and intergovernmental governance initiatives are highlighted, including more than 20 led by the UN and 15 by the Bretton Woods institutions, OECD and WTO. In addition, 45 multistakeholder initiatives to strengthen global governance and cooperation are spotlighted, including 25 that are facilitated by or linked to the World Economic Forum’s platform.
The white paper argues that implementation of a substantial portion of these would amount to an ‘operating
system upgrade’ for international cooperation and its indispensable core of multilateral institutions. Much of the remarkable progress humanity has experienced since the Second World War has been constructed on the foundation of norms and shared policy and action agendas organized through the United Nations system and Bretton Woods institutions. The white paper includes a summary of these achievements and argues for strengthening this precious institutional infrastructure, while anchoring it in a wider, multidimensional geometry of cooperative arrangements – a more robust underlying operating system – that advances common objectives even further.
‘Crisis need not and should not be relied upon again to be the mother of invention for improvements in governance required by our rapidly changing world. This report illustrates that there is no lack of opportunities to strengthen international cooperation and domestic governance now, so we do not have to resort to an emergency response later like the London G20 Summit a decade ago. The best way we can mark the 75th anniversary of the United Nations and Bretton Woods institutions next year is for all stakeholders to begin engaging this year in a sustained effort to strengthen and supplement the multilateral system,’ said Richard Samans, Managing Director and Member of the Managing Board, World Economic Forum.
Other key messages in the white paper include:
– ‘There has been a systematic underappreciation of the human impact of rapid economic change, whether due to technology or policy liberalization, in the priorities of national economic policy and the corresponding international institutional architecture.’
– ‘There are three practical steps countries can take to improve social justice and economic growth simultaneously. They each involve raising the level of investment in people across the public and private sectors.’ This is the crux of what it means for a country to strengthen its social contract in the world economy of the 21st century. It also represents the basis of a new, human-centred growth and development model that may be the best hope for sustaining the world economy’s momentum as the two growth engines on which many countries have been relying – extraordinary macroeconomic stimulus and export-led production – continue to lose steam.
– ‘Implementing the Paris accord will therefore require us to think beyond, and build upon, it.’ The white paper outlines four ‘new dimensions of climate change cooperative architecture – industry sector, value chain, plurilateral intergovernmental and bottom-up societal – that would facilitate the implementation of the NDCs registered by governments, likely strengthening the political confidence necessary to raise the ambition of such commitments in future years as foreseen by the Paris agreement.’
– ‘The Fourth Industrial Revolution and Globalization 4.0 are accentuating several risks that henceforth will require more explicit and proactive attention by boards. Loss of trust stemming from problems in any of them can reverse years of advances in market value and threaten a firm’s very existence. These relate to the use of personal and other sensitive data; the deployment of algorithms in internal processes and external products and services; the implications of climate change; corruption and financial crime; and labour practices.’
– ‘Companies have not only a legal obligation to pay taxes, but also a broader fiduciary responsibility stemming from their long-term value-creation mandate to ensure that they pay their fair share, which may not always be the same amount as that resulting from aggressive, multijurisdictional tax planning. Boards have a responsibility to ensure that their firms are acting not only legally, but also in keeping with the trust society has placed in them to contribute fairly and responsibly to the long-term viability of the economy in which they operate.’
– In the absence of an international organization dedicated to governance of advanced technologies, ‘the Forum itself launched the Centre for the FourthIndustrial Revolution Network in 2017 to serve as a public-private platform for the collaborative development and refinement of governance frameworks and protocols that more fully anticipate the risks and accelerate the benefits for societies of advanced technologies. It brings together governments, business organizations, dynamic start-ups, civil society, academia and international organizations to co-design human-centred governance protocols and policy frameworks, and pilot them with government and industry partners. It is establishing leader-level global councils composed of ministers and heads of regulatory agencies, chief executive officers, and leading technical and civil society experts to help shape the global technology policy and corporate governance agenda by providing a unique place in the international system where policy dialogue, practical learning and international agenda setting can take place across stakeholders and regions on an ongoing basis.’
– We do not face a stark choice between free trade and protectionism, technology and jobs, immigration and national identity or economic growth and social equity. These are false dichotomies. However, the prominence of these polemics in contemporary political discourse illustrates how underprepared we are for Globalization 4.0.
– ‘The paper should not be read as a general treatise or comprehensive overview of global governance but rather as a set of architectural blueprints for helping public and private institutions remain ‘up to code’ in Globalization 4.0, as well as a practical ‘users guide’ of opportunities for immediate engagement by all stakeholders.’
The paper does not seek to be exhaustive or prescriptive but rather illustrative and suggestive. Nor does it represent a formal position of the World Economic Forum or its members, partners, communities or constituents.
Source: World Economic Forum