BUSINESS

Global growth imbalances get focus in closing sess

By A K Bhattacharya in Davos
January 30, 2006 11:51 IST

The closing session, which marked the conclusion of the five-day annual meeting of the World Economic Forum in Davos on Sunday, identified imbalances in global growth as one of the key areas of concern and urged business leaders to act as global citizens and take responsibility to address these challenges.

The 36th annual meeting of WEF identified several areas of concern during the 240-odd sessions held in the course of the last five days.

These included the challenges arising out of the need for encouraging risk-taking, creating a global educational framework, reducing income disparities, meeting skills requirements, tackling the threat of climate change and ensuring sustainable environment through sustainable energy policies, global integration, accountability and responsibility among global leaders.

But several speakers taking part in the closing session emphasised the need for reducing the imbalances in global growth as the primary area of concern. Peter Brabeck-Letmathe, chairman and CEO of Nestle, referred to the existence of two worlds and the disconnect between the two.

He said there was general agreement at the WEF sessions on what needed to be done to reduce imbalances. But he could sense a confrontation between the two worlds when he attended an Open Forum session, which were organised to allow alternative views to emerge from non-governmental organisations (NGO).

The water problem in Asia and Africa could no longer be ignored if global growth had to be sustained without imbalances, he said.

Mukesh D. Ambani, chairman and managing director of Reliance Industries, said the WEF sessions underlined that this was an imbalanced world. The people were fighting two battles, he said.

"The developed world is fighting for world peace and better life, while the developing countries are fighting for prosperity," he explained, adding that business leaders, governments and the civil society had to ensure that the developing countries were assured basic living standards.

James D. Wolfensohn, former World Bank president, echoed similar views and argued that everyone should recognise that the world was changing and a paradigm shift had taken place with the emergence of China and India on the global scene.

There was also a mindset change that allowed the world to view China and India in a different way. But imbalances remained. "The comfortable part of the world must recognise that it is challenged by the world that is uncomfortable," he said.

A slightly different perspective on this issue came from Martin Sorrell, group chief executive of WPP Plc. Not denying that such imbalances existed, Sorrell said business leaders should be conscious of four new developments.

One, new markets like China and India were emerging on the global scene. Two, technology and convergence would force companies to look at their businesses differently. Three, the importance of innovation would increase even further in a low-inflation low-growth scenario in the developed world. And four, branding had become more critical as the world moved towards globalisation.

In his closing remarks, Klaus Schwab, executive chairman of WEF, said notions of paradigm change would continue and the spirit of Davos was to create global trusteeship to tackle these changes and the problems.

"When you go out, don't forget that you have a global responsibility as a global citizen," he told the participants.

A K Bhattacharya in Davos
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