Wednesday, December 14, 2011

International Development: Hope Dies Last Amid Global Recession Angst

By Richard Johnson
Courtesy IDN-InDepth NewsReport

GENEVA (IDN) - A spectre is haunting the world's better off – the spectre of global recession with dire consequences for the international economy pounding the coffers of the wealthy and nibbling away at the savings of the middle income groups.

But are things really that bad? Yes, things are bad but not hopeless, provided that global leadership steps out of existing structures to solve the world's multiple challenges, a new report says. In times of crisis, the leadership "must use what works, innovating on the spot, being decisive while mitigating risk, and being in a position to deal with the consequences."

The report has been produced by the World Economic Forum's Network of Global Agenda Councils, which the Forum says is itself an organ of "adaptive leadership – an approach it is taking in these crucial years in the evolution of modern society."

The report, titled Outlook on the Global Agenda 2012, is "the zenith" of the Network's annual work cycle that takes a group of 1,500 world experts "through issues-based collaborative work streams culminating in an Annual Summit held in the United Arab Emirates."

The Network met in Abu Dhabi in October 2011 and discussed "the euro crisis, the political gridlock facing the world's biggest markets in the United States and Europe; the critical loss of trust in many societies in the institutions of leadership and governance; resource scarcity; demographic challenges; and the impact of new technologies on the way we live, work and relate to each other."

Responding to a cluster of six issues outlined in discussions, the Global Agenda Councils came up with new models for solutions. But the search was not so much for a new model to solve every problem at once, but micro-models that can address particular issues at the appropriate level. This report contains several examples of these, including:

-- How to provide international liquidity in times of crisis through regional and global coordination

-- Active collaboration between the private and public sectors to attract capital and investment and encourage entrepreneurship in fragile states

-- Large-scale apprenticeships and internship programmes towards a “global pact” between the public and private sectors and civil society so every young person is employed, being educated, or both

-- Total Resource Management as a new approach for resource efficient growth

-- Transformation of learning through digital experience

-- Institutionalized multi-stakeholder interactions.

The new models must take into account the situation as 2011 inches to an end:

"Many points in the global political economy are under enormous strain. The West is wrestling with an economic crisis that has been underway for over three years, while Asia is managing its ascent through myriad micro-problems brought on by rapid growth.

"Many parts of the Middle East are facing wrenching political change. Africa is facing economic, political and humanitarian challenges. On all fronts – from the political and economic to the environment and the technological – the global agenda in 2012 is full with items that require global solutions," says the report.

The short-term picture in many pockets of the world is indeed bleak; "yet, humanity as a whole is in the middle of an unbroken winning streak." On the one hand, the global population has increased more than six fold since 1800. On the other, life expectancy has more than doubled and real income multiplied over nine times. Individuals are less likely to die as a result of childbirth, disease, war, murder or natural disaster than their ancestors.

Because of significant advances, since 1995, the average person earns more than three times, eats one-third more, buries one-third fewer of her or his children, and can expect to live one-third longer.

Participants in the Abu Dhabi Summit on the Global Agenda considered these challenges in six clusters:

Economic Outlook

Overshadowed by the crisis in the Eurozone, economic discussion is driven by the state of sovereign balance sheets. In 2008, when developed country governments stepped in to support their banking systems through the financial crisis, they brought the problem onto their own balance sheets.

The world's largest economies are now facing sovereign debt crises, and this at a time when many countries are confronted with a slow or negative growth and significant levels of unemployment. As a result, 2012 is likely to see increasing instability due to the absence of a sound and globally accepted financial regulatory system, lack of confidence in market participants or facilitators, and speculation, the report forecasts.

Power Shifts and Emerging Markets

Economic and political power is continuing to move from North to South and West to East. According to the report, the transition is weakening the multilateral system of global governance structured on international institutions, and encouraging the rise of regionalism across many domains of international relations, including security, trade and finance.

2012 will therefore see accelerated transfer of influence from traditional state-centred institutions to coalitions of the willing and non-state actors, manifested in diplomacy and action by networks of actors and regional organizations, says the report.

"These trends reveal a shift from large, expensive, institutional power to small, low-cost, unpredictable and grass-roots sources of power, such as the Arab Spring or the Indignados and Occupy movements," the report notes.

Inclusive Growth and Employment Creation:

The knowledgeable Global Council members gathered by the World Economic Forum are concerned about "persistent and sticky unemployment"; which they say, "has become the most significant economic and political issue faced by leaders across large swathes of the world.

Unemployment, in their view, is a manifestation of a number of structural faults: growth is too often achieved in boom/bust cycles; global population is rising; the divide between rich and poor continues to widen; and there is an increasing gap between education, skills and jobs.

Political Entrenchment and Multi-Stakeholder Governance

Faced with the worst economic crisis since the Great Depression, political systems in the United States and Europe have been found wanting. Decision-making gridlock in the world's largest markets has pushed global systems to the brink.

Meanwhile, as governments around the world have turned inward to focus on solving domestic economic and social issues, a vacuum of leadership on global issues has been growing.

Political institutions are faced with a critical loss of public trust, which is amplifying the need for direct action on behalf of a disenchanted and often desperate public. With weakening of states, new mechanisms such as multi-stakeholder partnerships in various forms and at different levels are expected to play a bigger role in delivering public value.

Natural Resource Scarcity and Climate Change

Stresses on natural resources and accelerating climate extremes will increasingly impact economic development and growth in many countries. Economic pressures will encourage innovation in sustainable growth technologies and models, but governments will come under pressure to set a visionary agenda for the 21st century at the UN Conference on Sustainable Development in Rio de Janeiro in June 2012.

The Digital Revolution

The Internet has become a key pillar of global prosperity. Work, leisure, consumption and policy decisions, supply chains, safety systems and communications – every aspect of modern life is shaped by the continually evolving digital world.

But the infiltration of digitalism into human affairs has brought peril as well as prosperity, notes the report. Non-state actors are challenging the enforcement capacity and legitimacy of the state in this digital environment. Centralized groups and hierarchies are moving towards more distributed networks, representing a shift in the balance of power.

At the same time, says the report, moves by governments worldwide to tighten control over cyberspace are exacerbating tensions tied to citizens' privacy, freedom of expression and demands for more transparency. "Social media and the need for security are generating a move towards a more compartmentalized and fragmented Internet."

The report pleads for an informed citizenry through policies that commit to transparency and to communicating pertinent information to stakeholders, build media literacy into education systems, support independent media, especially in the developing world, foster connectivity and open, competitive media markets, and protect media freedom, intellectual property and the openness of the Internet.