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Achieving Security and Addressing Vulnerability


... Predictions for Global Growth Growth and Equity U.S. Dominance The Future of Europe Japan s Malaise The Rise of China Concerns about China ... territorial ... – PowerPoint PPT presentation

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Title: Achieving Security and Addressing Vulnerability

World Economic ForumGravity Themes
Presenters name Presenters title or date
Annual Meeting 2002Gravity Themes
  • Restoring Sustained Growth
  • Achieving Security and Addressing Vulnerability
  • Reducing Poverty and Improving Equity
  • Re-evaluating Leadership and Governance
  • Sharing Values and Respecting Differences
  • Redefining Business Challenges

Restoring Sustained Growth
  • Predictions for Global Growth
  • Growth and Equity
  • U.S. Dominance
  • The Future of Europe
  • Japans Malaise
  • The Rise of China
  • Concerns about China
  • Emerging Markets
  • Wild Cards and External Shocks

Restoring Sustained GrowthPredictions for
Global Growth
  • A slump and recovery in Internet time, Alan
  • A lazy L, V or W-shaped recovery?
  • In 2002, the global economy is expected to grow
  • 2.8 and 2.5 percent
  • The U.S. economy is expected to grow by 2.3
    percent and
  • Europe by 1.8, while Japans will likely
    contract by
  • between 0.9 or 1.3 percent

Restoring Sustained GrowthPredictions for
Global Growth
Restoring Sustained GrowthGrowth and Equity
  • Sustainable growth meets the needs of the
    present without compromising the ability of
    future generations to meet their own needs.
  • Principles for equitable growth
  • equitable access to and use of production
    factors, such as land, capital, knowledge and
  • market-driven, effective private sector
    development that beneftis the poor and free
    public resources for improving social development
    and reducing poverty
  • socioeconomic development through regional and
    subregional cooperation without macroeconomic
    constraints such as inflation, tariffs and other
    barriers to trade

Restoring Sustained GrowthParameters of Growth
  • Industrialised countries account for 70 of the
    global economic output
  • Increasing productivity leading growth 8.6
    more in 2001
  • Growth also driven by increasing consumer
  • China leads Asias recovery with 7.6 in the
    first quarter largely due to higher government
    spending and a 9.9 increase in exports
  • Unemployment rates are finally going down after
    steady increases over the last 12 months

Restoring Sustained GrowthU.S. Dominance
  • Stability of the dollar
  • Worlds largest economy 34 of global GDP
  • Highest market capitalization 50 of global
  • Size of debt 400 Billion in 2001
  • Level of capital inflows 150 Billion in
    2001--down from 295 Billion in 1999
  • Is U.S.-centric global growth sustainable?

Restoring Sustained Growth The Main Parameters
for Sustaining Growth in Europe
  • U.K. is driving growth while Germany is
    preventing the Eurozone from overtaking the U.S.
  • Lack of integration and liberalization despite
    the emergence of the euro
  • MA capital flows are still largely Europe to U.S
  • Principles of the EUs Lisbon Agreement
  • open markets, rigorous competition policy and
  • targeted subsidies
  • invest in small businesses and public services
  • encourage a culture of risk-taking (e.g.
    venture capital)
  • facilitate innovation and greater RD

Restoring Sustained Growth Japans Malaise
  • Japans full decade of recession government
    unwilling to act decisively due to lack of broad
    political coalition
  • Investment redirected from Japan to China
  • Danger zones of the Japanese economy
  • banking sector--capped depositor insurance at
    10 million
  • corporate bankruptcies--19,000 in 2001
  • rising unemployment--1 million out of work
  • large public debt--130 of GDP
  • Priorities yen depreciation mergers with
    European and U.S. banks write-off bad loans pay
    down public debt


Restoring Sustained Growth Japans Malaise
Restoring Sustained GrowthThe Rise of China
  • 1,000 Billion GDP in 2001--8 increase from 2000
  • First aggressive stage of reforms is complete
  • privatization of state-owned enterprises
  • strengthening of patent laws and customs
  • stabilized their exchange rate
  • Further reforms underway
  • eliminating trade barriers and tariffs
  • privatizing telecommunications and financial
  • reducing duplicative regulations at the local
  • Received 400 billion in FDI (graphics)
  • Regional dominance in productivity

Restoring Sustained GrowthConcerns about China
  • Uncertainty about the political transition from
    pre- to post-reform leaders in the Chinese
    Communist Party
  • Mass unemployment due to liberalization,
    increased competition and restructuring of
  • Social stability in the interior among
    disenfranchised in primarily rural communities
  • Opposition to East Asian free trade zone (ASEAN
    countries China)

Restoring Sustained GrowthEmerging Markets
  • Argentinean financial crisis chilling investment
    climate throughout Latin America and threatening
    the stability of neighboring South American
  • Emerging market bond insurance rates at record
  • Foreign Direct Investment only fell a small
    amount between 2000 and 2001 (240 billion to
    225 billion)
  • Proliferation of free trade areas
  • The Doha Round importance of market access
    reforming European CAP increasing two-way

Restoring Sustained GrowthWild Cards and
External Shocks
  • Instability of Middle East oil producing
    countries and the impact of a widening regional
  • Potential U.S.-led attack on Iraq as part of the
    axis of evil and source of regional instability
  • Breach in U.S.-Saudi relations
  • Russian oil production and price spike
  • Another major terrorist attack
  • Deepening blow to consumer confidence in response
    to the Enron scandal

Achieving Security and Addressing Vulnerability
  • Globalization of Vulnerability
  • Global Security Threats Major Regional Conflicts
  • Global Security Threats State Failure and Civil
  • Global Security Threats Asymmetric Weapons
  • Soft Drivers
  • Preventive Strategies
  • Risk Assessment
  • Cooperation between Business and Government

Achieving Security and Addressing
Vulnerability Globalization of Vulnerability
  • New era of geopolitical and social instability
    proliferating actors cause uncertainty and rapid
  • Risk Society security is a higher priority
    across all industry sectors and regions
  • General uncertainty and the implications on the
    global economy, governmental decisionmaking,
    allocation of resources and social behavior
  • Co-existence of hard security threats
    (traditional threats of war between states, WMD,
    terrorism) and soft security issues (health,
    poverty, environment)

Achieving Security and Addressing
Vulnerability Global Security Threats -Major
Regional Conflicts
  • Regional conflicts remain the greatest threat to
  • global stability
  • China - Taiwan
  • Korean Peninsula
  • India - Pakistan
  • Arab world - Israel
  • Iraq - U.S.

Achieving Security and Addressing
Vulnerability Global Security Threats -State
Failure and Civil War
  • Secessionist/Irredentist conflicts
  • Indonesia, Philippenes
  • Chechnya
  • Colombia
  • Sudan
  • Failed states can serve as safe havens for
    terrorists to export violence, illicit drug and
    arms trading
  • International community becomes heavily involved
    with massive costs for peace-keeping,
    reconstruction, refugee resettlement,
    humanitarian aid, institution-building

Achieving Security and Addressing
Vulnerability Global Security Threats
-Asymmetric Weapons
  • Weapons of Mass Destruction Nuclear, chemical,
  • Increased availability of technology/material
  • Continued large nuclear weapons stockpiles
    accident-prone arsenals in Russia, India,
  • Communications technology empowers clandestine
    groups with global reach
  • Cyber-attacks capitalize on increasing dependence
    on computer technology
  • Manipulation of information and media channels
    allows for amplification of terrorist messages

Achieving Security and Addressing
Vulnerability Soft Drivers
  • Health 13 million preventable deaths annually
    from 6 diseases causing social imbalance and
    economic stagnation
  • Poverty Greater visibility of rich-poor gap
    encourages resentment and opportunistic violence
  • Environment Access to fresh water control of
    arable land conflict over precious natural
  • Projections indicate by 2025, 3 billion people
    across 26
  • countries may lack access to arable land and
    potable water
  • Drug trafficking Growing strength of global
    organized crime government manipulation and

Achieving Security and Addressing
Vulnerability Preventative Strategies
  • Elimination of capabilities International
    cooperation to prevent spread of weapons of mass
  • Denial of motivation Delegitimize global
    terrorism as a means of promoting a political or
    social agenda
  • Intervention Early-warning systems and swift
    preventative action
  • Confront root causes Social inequity, economic
    and political disenfranchisement, cross-cultural
  • International organizations reassess their role
    and capabilities

Achieving Security and Addressing
Vulnerability Risk Assessment
  • Corporate strategy
  • Scenario-planning for evaluating risks
  • Policies for protecting assets and personnel
  • Sharing best practices across industry sectors
  • Re-allocate resources for substantive, long-term
    protection of critical assets and interests

Achieving Security and Addressing
Vulnerability Cooperation Between Business
  • Western companies with investments abroad are
    likely targets of future terrorism
  • Public-private efforts to develop solutions
    Customs, banking, critical infrastructure,
    emergency response
  • Cross-industry collaboration Implementing
    stronger security guidelines
  • Regulation across borders Comparable and
    compatible standards
  • Planning for protection of critical

Reducing Poverty and Improving Equity
  • Poverty Still the Number One Issue
  • Government and Accountability
  • Modernization and Technology
  • Access
  • Conflict and Violence
  • The Private Sector Role
  • The Business Case

Reducing Poverty and Improving Equity Poverty
- Still the Number One Issue
  • 2 billion people living in poverty
  • Poverty is the result of multiple hardships
    Hunger, disease, oppression, conflict, lack of
    education, pollution, and depletion of natural
  • Income inequality between countries is declining,
    but rising within them
  • Developing countries still lack access to foreign
    markets for most competitive products
  • Developed economies spend US 350 billion
    annually on subsidies for agriculture (seven
    times the aid expenditures)

Reducing Poverty and Improving Equity
Government and Accountability
  • Government must support markets as well as
    protect against market failure
  • Government must create the legal structure and
    economic incentives to foster entrepreneurship
  • Lack of transparency in government
    decision-making is the biggest hindrance to
    foreign investment
  • Only democratic governments will be able to limit
    corruption and encourage development

Reducing Poverty and Improving Equity
Modernization and Technology
  • Integrate new technologies into infrastructure to
    leap-frog older technologies
  • New technologies Health care, increased
    agricultural output and productivity,
    environmental protection and pollution control
  • Source of economic growth as developed countries
    outsource labour intensive product development to
    developing economies
  • IT as a cost-effective means for marketing local
    products to a global marketplace

Reducing Poverty and Improving Equity Access
  • Sources of knowledge through free and open media
    and information technology tools
  • Transfer of the latest technologies and know-how
  • Provision of basic healthcare, housing, and
  • Availability of credit and other means for
  • Existence of capable, democratic institutions

Reducing Poverty and Improving Equity Conflict
and Violence
  • Armed struggle for scarce precious resources in
    poor countries, e.g. water, arable land, oil,
  • Expenditures o weapons instead of commodities and
    social development
  • Poverty and hunger breed desperation among the
    disenfranchised, enabling extremist opportunism
  • Conflict most affects the poor, old, women, and

Reducing Poverty and Improving Equity The
Private Sector Role
  • Business is not a social delivery vehicle, but
    economic growth is the best-proven path to
    development and poverty eradication
  • The long-term value of sustainable and equitable
    economic growth far outweighs any level of
    government aid or corporate philanthropy
  • Poverty as a business opportunity

Reducing Poverty and Improving Equity The
Business Case
  • Healthy and prosperous communities create stable
    environments for business to operate and a more
    productive workforce
  • Employees look to companies to lead by example
    with good corporate citizenship
  • Consumers prefer products from companies that
    demonstrate a commitment to the public good new
    evaluation criteria required to develop market
    rewards for socially responsible corporations

Re-Evaluating Leadership and Governance
  • Complex World Order
  • Pressures on the Global System Haves vs.
  • Pressures on the Global System Institutional
  • Global Public Goods
  • Models of Global Governance Institutionalist
  • Models of Global Governance State-Centric Model
  • Models of Global Governance Global Market Model
  • Models of Global Governance The Network Model
  • Emergence of Networks Business
  • Emergence of Networks NGOs

Re-Evaluating Leadership and Governance
Complex World Order
  • Improper management systems for more turbulent
    world global governance architecture resistant
    to change without crisis
  • New shape of global governance must be determined
    despite prevailing uncertainty leadership needed
  • Those who have knowledge lack power, those in
    power lack legitimacy, and those seeing
    themselves as legitimate lack knowledge and power

Re-Evaluating Leadership and Governance
Pressures on the Global System -Haves vs.
  • Information disenfranchisement
  • Cultural dominance
  • Access to sources of wealth and natural resources

Re-Evaluating Leadership and Governance
Pressures on the Global System -Institutional
  • Widespread sentiment that voices of citizens do
    not matter decreased turnout in elections in
    democratic states
  • Globalization causes the erosion of sovereignty
    overlapping communities and trans-border problems
  • Market forces create global economy, but it is
    managed by individual nation-states
  • Increasing influence on policymaking of unelected
    and largely unaccountable multi-national

Re-Evaluating Leadership and Governance Global
Public Goods
  • How and by whom should public goods be managed?
  • Most powerful countries and companies have most
  • Business has a role to play both in defining and
    managing public goods
  • Increased regulation of the environment but need
    for global regulation and supervision of
    monopolies in areas such as communications and
    healthcare, as they are increasingly regarded as
    public goods
  • Do self-regulation and private sector management
    of public goods serve the public interest?

Re-Evaluating Leadership and Governance Models
of Global Governance -Institutionalist Model
  • Continued emphasis on multi-lateralism
  • Strengthen the state and reform existing
  • Create new institutions to handle cross-border
    problems and emerging areas, e.g. World
    Environment Organization

Re-Evaluating Leadership and Governance Models
of Global Governance -State-Centric Model
  • Interest-based coalitions, more frequently
  • Hegemony preserves global stability Pax
    Americana undemocratic
  • Transnational global issues not adequately

Re-Evaluating Leadership and Governance Models
of Global Governance -Global Market Model
  • Economic dominance over politics
  • Companies subvert international standards through
    loopholes in treaties MNCs benefit from
    discipline imposed by IFIs
  • Private global governance is the chief target of
    the anti-globalization backlash

Re-Evaluating Leadership and Governance Models
of Global Governance -The Network Model
  • Multistakeholder approach integrating states,
    private sector and international civil society
  • Identifying win-win opportunities for cooperation
    through harmonizing interests of various actors
  • Leveraging technology both to create and combat

Re-Evaluating Leadership and Governance
Emergence Networks - Business
  • Growing power of business in a state-centric
    world leadership means recognizing
  • Increasing need for business to consider
    fundamental change in role without abandoning
    day-to-day responsibilities
  • Business must have a clear and common view of
    responsibilities, and sense of core values in
    developed and developing world

Re-Evaluating Leadership and Governance
Emergence Networks - NGOs
  • Macro NGO emphasis on first principles -
    structure, power, values
  • Micro UN-NGO partnerships necessary to impact
    situation on the ground, despite lack of
    macro-level reforms
  • Meso New global policy-making processes involve
  • How to determine the democratic accountability of

Sharing Values and Respecting Differences
  • The Role of Values
  • Globalizations Values
  • Globalizations Impact on Existing Value Systems
  • Transnational Values of International Cooperation
  • The Role of Religion
  • Responsibility, Justice and Conflict
  • The Communication of Values Education and Media
  • The Communication of Values Private Sector

Sharing Values and Respecting Differences The
Role of Values
  • Leadership increasingly needs to be networked
    along common values
  • Is there an evolving normative coherence, a set
    of values at the heart of governance?
  • Universal principles as basis for society
    Democracy and rule of law, human rights and
    liberty, sustainable development, equitable
    access to opportunity
  • Education and media systems are mostly local,
    lacking global perspective more communication
    required across borders

Sharing Values and Respecting Differences
Globalizations Values
  • Belief in technological innovation
    communications technology also a driver of
    cultural challenges
  • Meritocracy and competence but the world is not
    a corporation
  • Birth of a common world generational values
    emerging, especially youth
  • Respect, justice and equal opportunity promoted
    by both religious leaders and anti-globalization
  • Assumptions of security and superiority breed
    arrogance and lack of respect for differences

Sharing Values and Respecting Differences
Globalizations Impact on Existing Value Systems
  • Clashes within civilizations result from conflict
    over response to other cultures
  • In the context of great structural inequality and
    unemployment, an explosion of cultural confidence
  • Criticisms of current form of globalization
  • Cultural under-globalized cultures not respected
  • Socialglobalization not just disease,
    malnutrition, wealth distribution, education
  • Environmental globalization does not dignify
    life global warming, species extinction

Sharing Values and Respecting Differences
Transnational Values of International Cooperation
  • Common humanity 21st century will be defined by
    decision to join in common humanity or emphasize
    differences (Clinton)
  • Diversity Recognition of the other as an
    asset, enriching ones own ideas and expanding
  • Accommodation How to determine which value
    systems should be tolerated?
  • Individual responsibility Empowerment of
    individual to serve collective good in accordance
    with universal norms

Sharing Values and Respecting Differences The
Role of Religion
  • Part of the problem and solution self-contained
    value systems are dangerous in a globalized world
  • Major differences not between value systems, but
    how these values are expressed leaders seek to
    protect their value systems against others
  • Religious responsibility needs to be emphasized
    like corporate social responsibility

Sharing Values and Respecting Differences The
Role of Religion
  • Non-secular ethics - all religions share three
  • Respect the golden rule see the world not as
    categories of people but as global village of 6
    billion people
  • Justice Equal opportunity for all
  • Dignity of life The most basic value,
    intuitively shared by all
  • No religion or civilization is monolithic All
    are pluralistic and divided

Sharing Values and Respecting Differences
Responsibility, Justice and Conflict
  • New responsibility for political leaders not to
    guard vested interests, but rather defend and
    promote collective aims
  • Strong urge for justice No longer a dilemma
    between justice and peace ability to impose
    compromise has decreased
  • Diversity a driver in conflict only when
    political systems are dysfunctional, when
    economic imbalances exist and when civil society
    cannot mediate
  • Causes of conflict Sense of exclusion, religion
    used as a mask for greed and political
    entrepreneurship, decline of state, human nature

Sharing Values and Respecting Differences The
Communication of Values -Education and Media
  • Attitudes of respect and democratic behaviour can
    be taught
  • Both religious and secular education must focus
    on change at the local level
  • Developing a cultural component of globalization
  • language training and networking classes
  • openness to immigration and de-culturalizing
    political conflicts
  • tourism, sports and television
  • Media News translations

Sharing Values and Respecting Differences The
Communication of Values -Private Sector
  • Emphasis on merit, with diversity used as a
    balance diversity must become an asset
  • Values as acritical foundation for strong
    management communication
  • Corporations can teach not only practicap skills,
    but also facilitate strong supra-national values
  • Multinationals which go global should emphasize
    global-local model

Redefining Business Challenges
  • The Corporation in the New World
  • Post-September 11th Uncertainty
  • Corporate Governance
  • Corporate Citizenship Internal Stakeholders
  • Corporate Citizenship External Stakeholders
  • The Successful 21st Century Corporation
  • Corporate Leadership
  • Managing Risk

Redefining Business ChallengesThe Corporation
in the New World
  • Increased uncertainty in business as well as the
    political realm
  • Strengthen corporate governance and increase
    private sector accountability
  • Balancing the growing need for corporate social
    responsibility with reasonable expectations
  • 21st century corporations are global and
    multi-cultural and need to respect diversity

Redefining Business ChallengesPost-September
11th Uncertainty
  • Attack on commerce recast terrorist warfare and
    the role of business in ensuring security
  • New physical vulnerabilities require reallocation
    of resources and focus
  • Business needs to conduct scenario planning in
    order to cope with increasing uncertainty and
    manage risks

Redefining Business ChallengesCorporate
  • Business faces critical challenge of rebuilding
  • Re-examine the relationship between intersecting
    lines of business, such as business consulting
    and accounting
  • Consider policies to ensure greater transparency
    and accountability

Redefining Business ChallengesCorporate
Citizenship - Internal Stakeholders
  • Renew commitment to employees and shareholders
    interests above those of leadership
  • Commit to and communicate a common set of values
    to stakeholders
  • A new level of business ethics and a welcoming of
    increased accountability is required

Redefining Business Challenges Corporate
Citizenship - External Stakeholders
  • Corporations face even gerater pressure to be
    more socially conscious
  • Structural and systemic challenge between
    regulation and self-regulation
  • Incumbent on business to communicate the benefits
    of increasing economic integration with a social
    conscience in the developing world

Redefining Business ChallengesThe Successful
21st Century Corporation
  • Multiple models of corporate structure and global
    best practices
  • Corporations must be hybrids - cross-cultural and
  • Businesses need a meaningful organizational
    culture built around values as a community of

Redefining Business ChallengesCorporate
  • New leadership model requires the vision thing
  • Management is required to interface within the
    organization and with the outside world on social
    and political concerns
  • Intellectual capital takes on increased
    importance and need to be nurtured

Redefining Business ChallengesManaging Risk
  • Decentralizing control to ensure leadership
  • Investing in back-up systems
  • Fostering core values to continue in the absence
    of leadership
  • Strategically dispersing assets