Davos: Protectionism pummelled despite the shadow in the background
As one gets through the week at Davos, one always notices certain themes emerging. It is possible that many of these themes become self-reinforcing but they are threads that seem to link the different sessions and speeches, even if you do not attend all of them. All major speeches by the heads of state, which included those of India, Canada, Germany, France, Italy and Brazil, made a forceful argument against protectionism and for multilateralism.
At his plenary address, Prime Minister Narendra Modi had made the case for open trade and how India was opening up sector after sector. Similarly, German Chancellor Angela Merkel and French President Emmanuel Macron said very clearly that the answer to the world’s problems was not to close borders, either for trade or to people. They were energized in their defence of a united Europe with a Franco-German alliance at the heart of it. Their clear message—“Europe is back!”
Shadow in the background
Despite all the talk of globalization to a mostly receptive audience, there was this shadow in the background. It was the much-anticipated address of President Donald Trump. Was he going to poke Davos in the eye by pushing forward his “America First” agenda or would he reach out by offering a view of America’s role in the world? A year ago, there was great anxiety here about Trump across a variety of dimensions. The speculation on the kind of reception he was going to get was put to rest when he walked through the Congress Center on Thursday afternoon: about 300 people had lined up holding up their phones in the air to take a photograph of him. Everyone wanted to see the man they grudgingly acknowledged was the master of dominating news cycles. I wrote this before his address and you’ll know by the time you read this what he said and what the reaction was. The discussion among CEOs was that if you desire to hear him speak, better show up two hours early to stand in queue.
The China factor
China continued to dominate economic and business discussions. Liu He, a member of the Politburo and an influential advisor, committed that China’s debt load would be under control within three years, an issue that has been a cause of concern for global financial markets. China was there in every discussion on new tech—from e-commerce to blockchain to artificial intelligence (AI). Many companies based there have the potential to overtake Western ones in their application of these technologies.
Technology and blockchain
The discussions this year on the applications of blockchain and AI felt more real than from even a year ago. People talked about how they were using it on everything from improving efficiency of power systems to improving the distribution of food in refugee camps. Discussions on medical technology revolved around the advances in our understanding of the human body and how we can extend life. Yuval Harari observed that in a hundred years, the human species would be as different from who we are today as we are from Neanderthals. His point was that whether you like it or not, it wasn’t a choice.
Gender equality was the other thread of conversations. It wasn’t a coincidence that all the co-chairs of the conference this year were women. Justin Trudeau (with a gender equal cabinet) made the case for gender parity on pay and for gender equality. More power to them!
Strong Indian presence
I would be remiss if I didn’t highlight the Indian CEOs’ presence at Davos. There are 130 of us (and for those obsessed with comparisons with China, there are about 100 from that country). What’s more, CEOs, political leaders and bureaucrats had a meaningful presence in many panel discussions. In prior years, it felt as though talking about the potential in India was whistling into the wind. Now, there is a lot more interest in hearing about India. Invest India, an arm of the government that facilitates foreign investments, has taken over a storefront on the main promenade and there is a constant stream of CEOs to understand what they could do in India. Taxpayers should rest safe in the knowledge that their political leaders and bureaucrats are working extremely hard to attract investors.
As I sign off, the overall reflection is that there is more optimism around the business and economic climate than there was a year ago. The careful withdrawal of quantitative easing in Europe and the fiscal stimulus through the new tax code in the US has extended the global growth cycle. I guess we need to leave something to continue to discuss at future forums.
Sri Rajan is chairman, Bain and Co. India. Views are personal.
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