The World Economic Forum or Davos Forum is a meeting of political and business leaders from around the world. This year’s event was held from the 17th through 20th in Davos, Switzerland. This meeting has enough authority and influence to be dubbed the “World Economic Olympics,” so we’ll take a look at what was discussed this year and what kind of future Korea should focus on with Dr. Jung Min of the Hyundai Research Institute. Let’s first take a look at this year’s main topic of discussion.
This year marks the 47th anniversary of the World Economic Forum and it’s main theme was “Responsive and Responsible Leadership”. As we are living in a socially and politically insecure environment, the rapid advancement of the fourth Industrial Revolution is expected to increase uncertainties. In order to resolve this situation, we need responsible world leaders that are open to communication. Responsive and responsible leadership means providing alternatives for sustainable growth to people who feel anxious and frustrated about increasing uncertainty and the collapse of the existing system. It also means that in order to break away from the existing system and respond to the rapidly changing economic and social environment, world leaders must create future oriented policies and institutions.
The annual Davos Forum is already in its 47th year and it was held under the theme “Responsive and Responsible Leadership”. The fourth Industrial Revolution, which is the convergence of Internet of Things (IoT), Artificial Intelligence and mobile technology, is rapidly progressing. In addition, the official launch of the Trump Administration in the US and full-scale negotiations for Brexit in the UK are both increasing uncertainty around the world. To overcome this situation, the forum is saying that world leaders must be responsive and responsible. Over 3,000 global leaders such as UK Prime Minister Theresa May, UN Secretary General Antonio Guterres, Executive Chairman of Alibaba Group Jack Ma and Hyundai Motor Vice Chairman Chung Eui-sun(정의선) attended this year’s meeting. Out of the many leaders who were there, the person that gathered the most attention was Chinese President Xi Jinping.
In the past, the discussions at Davos centered around leaders from Western countries. But, with the participation of Chinese President Xi Jinping this year, it shows how the forum is moving away from being centered around Western countries and becoming more diversified. The Chinese President’s participation also shows us how much influence China has in the world. If we look at his keynote speech, Xi emphasizes the flow of globalization and mentions China’s role in the world. He is highlighting China’s growing presence in the world and although he didn’t mention it directly, Xi also expressed opposition to the Trump Administration’s trade protectionism. In addition, Xi promised China’s strong economic growth through economic restructuring.
This is the first time that a Chinese President took part in the Davos Forum. Chinese President Xi Jinping received much attention as he gave the opening speech at Davos on the 17th local time. In his speech, Xi emphasized China’s role in the world while expressing firm opposition to trade protectionism. On the surface, his speech is defending globalization but it is also seen as a direct hit towards the Trump Administration’s policy for protectionism. Protectionism was also a global issue that was widely discussed at this year’s Davos Forum.
Protectionism is expected to spread further with the inauguration of Donald Trump as President of the US. The number of trade restriction measures that G20 countries have put in place increased recently. It reached 21 per month on average from October 2015 through May 2016. The figure is the highest since 2009, showing that protectionism is growing. Also, the world economy itself is now experiencing a slowdown in growth which is causing further uncertainty. After the 2008 financial crisis, the global economy has been on a steady decline. With unexpected events such as Brexit and Trump’s win in the US Presidential Election, volatility has increased even further for the world economy.
The Davos Forum searches for the future direction of the global economy. This year, it is taking guard against unexpected volatility such as Brexit or the growth of protectionism around the world with an increase in the number of trade restriction measures. Other issues discussed at the forum include the rise of populist protectionism in the EU and an increase in risk factors due to natural disasters and terrorism. However, the forum also focused on new opportunities for growth as 2017 marks the year that the fourth Industrial Revolution gets into full swing. This is expected to lead to the rapid development of major industries through convergence as well as the emergence of corporations based on digital platforms such as the “sharing economy”. So, how should the Korean economy prepare for all the rapid changes lying ahead in 2017?
First of all, the Korean economy should be prepared for an upsurge in uncertainties both at home and abroad. At the same time, it should focus more efforts on stabilizing the domestic economy and improving the economic structure. In order to prevent political uncertainty leading to uncertainties in policy, consistency must be maintained for economic policy to some extent. Also, Korea’s economic structure needs to transform into one that can withstand external shocks by raising the domestic economy’s growth potential and increasing household income. Meanwhile, it will be necessary to respond to changes in the internal and external environment by upgrading the industrial structure and improving the corporate environment through exact predictions for future changes brought on by the fourth Industrial Revolution. As such, we need to reevaluate the industries that have been selected as future growth engines. We need to discover new growth engines that are most likely to succeed in the future that the fourth Industrial Revolution will bring. Then, we must change the internal and external conditions and reflect the entry and investment performance of domestic companies.
The future that this year’s Davos Forum presented is the same as the future task that lies ahead for the Korean economy. The Korean economy is in dire need of creating new growth engines and eliminating uncertainty. Based on what was discussed at Davos this year, Korea must focus on improving its economic constitution.