Saturday, July 7, 2012

Davos World Economic Forum Research Paper

Davos World Economic Forum Research Paper

Davos World Economic Forum is considered to be one of the most efficient tools of the international economic cooperation that targets not only at the solution of purely economic problems but also is supposed to contribute to the solution of social and political problems as well. What is more important Davos Economic Forum is a really global event which attracts the attention of the world political and economic elite as well as specialists working in the domain of economy, politics and sociology.

However, regardless the noble goals of Davos World Economic Forum, there are a lot of critics who oppose the organization of such events and actively protest against it. According to them, Davos World Economic Forum is associated with the process of globalization which is also severely criticized. In such a way, Davos World Economic Forum is quite a contradictive event that has its own supporters as well as opponents but, anyway, the decisions taken at the Forum have a profound impact on the development of the world economy and can define the current policy of the leading states of the world as well as the policy of the largest multinational corporations. This is why it is necessary to carefully research the issues Davos World Economic Forum deals with in order to understand what it actually is, what its objectives are and what consequences the organization of the Forum may have on the further development of the world. In this respect, the recent World Economic Forum Annual Meeting 2007 called “The Shifting Power Equaiton” is particularly noteworthy since the decision taken during this meeting can define the development of the world for the nearest future as well as it is equally important in the long-term perspective.

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The essence of Davos World Economic Forum
Speaking about Davos World Economic Forum, it is primarily necessary to say that it is the annual meeting of the World Economic Forum in Davos. In fact, the World Economic Forum is a Geneva-based foundation which annual meeting in Davos involves the participation of top business leaders, national political leaders and selected intellectuals and journalists (5). In such a way, different powers are widely represented in this economic forum and, what is more important, the participants of the Forum play an important role in their own countries as well as they are an important figures in international economic, political, or scientific circles.

It is worthy of mention that Davos World Economic Forum dates back to 1971 when it was organized for the first time by Klaus M. Schwab, a business professor in Switzerland. Remarkably, Davos World Economic Forum has started its functioning at the moment when the processes of economic globalization were particularly strong. In fact, it was the period when the important steps on the development of the European Union as an international community targeting at economic cooperation were undertaken. This is why, it is possible to estimate that the foundation and following development of Davos World Economic Forum was closely associated with the processes of economic globalization and it was a kind of reaction of the leading economists, businessmen, politicians and scientists on the recent trends in the world economy which affected practically all spheres of human life.

Obviously, the foundation of Davos World Economic Forum was motivated by the natural need of the world leading economic and political powers to solve their problems on the higher level and in a less formal atmosphere (2). In actuality, initially, Davos World Economic Forum provided an excellent opportunity for leading companies to establish and ameliorate international cooperation with other companies operating worldwide at one place and at the same time. Gradually, the objectives of Davos World Economic Forum enlarged and its importance steadily grew to the extent that nowadays the supporters of the process of globalization and organization of Davos World Economic Forum state that the Forum provides one of the rare opportunities to gather the world economic and political leaders to think over the burning global problems and in a cooperation with leading attempt to find their solutions.

However, critics of Davos World Economic Forum underline that its goals have never changed and they still remain purely economical. Moreover, they estimate that it is still just “a business forum, where the richest businesses can easily negotiate deals with one another and lobby the world’s most powerful politicians, and that the aim is profit-making rather than solving economic problems like poverty” (2:129). Obviously, in such a context the declarations of the supporters of Davos World Economic Forum seem to be highly hypocritical since, in such interpretation, the Forum is just an excellent opportunity for the most powerful businessmen to solve their current problems, improve international cooperation, develop links with their partners worldwide and simply make more money disguising it under the pretext of the solution of really serious global social and economic problems.

In this respect, it is necessary to underline that the representation of different countries and regions of the world, being really enormous, still seems to be a bit unjust and disproportional that enforces the criticism. For instance, specialists underline that the World Economic Forum membership, the membership of its board, and the attendance at its annual meetings is “heavily composed of representatives from Europe, the USA, and industrialized Asia” (3:210). Obviously, such a dominance of the well-developed industrial or even post-industrial countries cannot contribute to the objective perception of global socio-economic problems and it is quite logical to presuppose that the participants of the Forum would rather focus on the problems that are particularly disturbing for them and directly affects Europe, the USA and industrialized Asia, than the problems of the poorest states of the world form Africa, for instance.

At the same, it should be said that Davos World Economic Forum is not actually open for all companies willing to participate. In fact, there exist certain barriers before those who are willing to participate in the Forum that also seems to be quite unjust and limiting the opportunities of representatives of the poorest countries. For instance, in 2002 each member company had to pay a basic annual membership fee of $12,500 and a $6,250 Annual Meeting fee (5). However, it was just fee for the participation in the Forum, while in order for a company to be able to participate in deciding the agendas of the Annual Meeting and the regional meeting, the company had to pay $250,000 in order to be an Institutional Partner and/or Knowledge Partner, and $78,000 to be an Annual Meeting Partner (5).

In such a way, it is obvious that the membership fees constitute quite a significant figure, especially for a company from a developing country that makes the active participation of such companies in the Forum practically unaffordable for them. On the other hand, the organization of Davos World Economic Forum turns to be quite profitable for its income in 2001 constituted $104 million, where $38 million of this was from the membership fees.

Consequently, it is really possible to speak about certain under-representation of developing countries in Davos World Economic Forum that naturally deprives them of the opportunity to really influence the decisions taken during the Forum.

Practically, it means that Davos World Economic Forum turns to be a kind of a club with a limited access where the leading economic and political powers of the well-developed countries of the world take decisions that can and do influence the further development of the world economy and that define the policy of the leading countries of the world that cannot fail to affect the policy of smaller and weaker states and companies from developing countries whose interests remain secondary compared to the interests of well-developed states and leading companies of the world even though the problems of developing countries are more serious which economic and technological backwardness threatens to the well-being of a substantial part of the world population.

The World Economic Forum Annual Meeting 2007 “The Shifting Power Equation”
The recent World Economic Forum Annual Meeting 2007 could be a really turning point in the further development of the entire world as it basically focused on vitally important global problems which also concerned developing countries but, at the same time, affected dramatically the most developed part of the world. The last World Economic Forum Annual Meeting started in Davos on January 28, 2007. Basically, this World Economic Forum Annual Meeting was focused on the problem of the climate change, though a number of other problems were also discussed among which the economic situation and progress of developing countries and their role in the world economy and process of globalization were among the most important issues.

Speaking about the main objectives of the Meeting notably the problem of the climate change, it should be said that this problem is really important and affect all countries without exception. At the same time, it is obvious that it is well-developed industrialized countries that are responsible for the dramatic climate change. It is not a secret that well-developed countries, with the population which hardly constitutes 30-40% of the world population, consume the major part of natural resources of energy, including gas and oil, electric power, etc. that negatively affects the environmental balance and deteriorate the ecological situation in the whole planet leading to the rapid and irrevocable change of the global climate (4).

However, it would be a mistake to think that this problem is purely environmental. In actuality, the climate change affects dramatically the economy of many countries or, to put it more precisely, it affects the economy of all countries but developing countries suffer the most for they do not have neither financial nor technological resources to resist to the serious change of natural conditions. The latter is extremely important for developing countries for it affects agriculture which is one of the major branches of economies of developing countries.

On the other hand, the climate change needs additional funding of agriculture and elimination of negative consequences of the global climate change in developed countries too. In this respect, it is worthy of mention that the recent natural disasters are provoked by the climate change and many developed countries, especially the US, suffered from destructive consequences of such natural disasters. Paradoxically, some of the developed countries still refuse to develop effective measures to minimize negative impact of human activity on nature. For instance, the US refuses from of the Kioto protocol’s ratification which targets at the gradual minimization of pollution of the environment, while the country remains among the leaders of the pollution of environment.

In such a situation it is quite natural that Davos World economic Forum Annual Meeting was an excellent opportunity to focus on this problem once again and involve the leading companies, political leaders and the most outstanding scientists in the solution of the problem that threatens stability and future of the whole world. In this respect, not less significant was the problem of more effective integration of developing countries in the world economy.

It should be said that many specialists (2) indicate at the fact that the participants of this year Forum emphasized the growing role of the emerging markets and admit the fact that nowadays there is “a significant power shift towards emerging economies” (1). At the same time, it is also worthy to note the growing role of developing countries in the labor market since nowadays many companies from developed countries tend to cooperate with developing ones and move the production in the regions where the labor force is ‘cheaper’ than in developed countries.

In this respect, it should be said that representatives of developing countries, such as Rachid M. Rachid, Minister of Foreign Trade and Industry of Egypt, hope that the developing countries will get more opportunities to benefit from the shift of power by means of global trade talks (1) which can help developing countries to benefit more from the integration in the world market and free trade between states than they benefit now. However, it is necessary to underline that many critics (3) of globalization indicate at the fact that globalization is really profitable for developed countries only. In such a situation, it is possible to presuppose that the last Annual Meeting and the suggested shift of power can really change the situation and improve the position of developing countries.

On analyzing the World Economic Forum Annual Meeting 2007, it will be natural to dwell upon the most important decisions taken during the Meeting. First of all, it should be said that the Forum announced the formation of “a new international partnership of seven organizations to establish a generally accepted framework for climate risk-related reporting by corporations” (4). Practically, this means that information concerning climate change will be collected from different companies worldwide and it will be standardized in order to facilitate comparative analysis of the climate change by specialists, including not only scientists but managers, investors and public as well.

Furthermore, an alliance of leading companies was “announced with the objective to bring power to villages in Sub-Saharan Africa” (4). It is not a secret that this region has the lowest electrification rate and naturally the electrification of the region will contribute to the improvement of the life of the local population and partially solve socio-economic problems in the region.

Also, the problem of corruption was amply discussed and the heads of the Big Four Accounting firms have agreed to work with the World Economic Forum Partnering Against Corruption Initiative (PACI) to support the global fight against corruption. Similarly, the Presidents of the World Bank, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and the Executive Director of the international Finance Corporation reaffirmed their support of the PACI (4). In such a way, the leading economic organizations of the world pays a lot of attention to the problem of corruption which is particularly serious in developing countries and the international support in the solution of this problem is really important for poor countries.

Thus, taking into account all above mentioned, it is possible to conclude that Davos World Economic Forum, being actually the ‘product’ of globalization, focuses on numerous problems of the modern world. However, unlike it was in the past, nowadays the Forum focuses on a wider range of problems that basically concern socio-economic development of the world. At the same time, it is necessary to underline that traditional Annual Meeting are often characterized by under-representation of companies from developing countries and often the interests of developing countries remain secondary. As a result, the Forum basically serves as an effective tool of development economic cooperation between leading world powers.

On the other hand, the last World Economic Forum Annual Meeting 2007 “The Shifting Power Equation” revealed the fact that nowadays it is practically impossible to ignore the problems of developing countries while the existing problems become really global, such as the problem of climate change. In such a situation, it is really important that the participants of the Annual Meeting perfectly realize the importance of the solution of these problems and, what is more, they also realize that it is necessary to involve all countries in its solution. As a result, the decisions taken during the Annual Meeting aim at the elimination of global problems, such as the climate change, and support of developing countries to cope with such problems as corruption and support their economic development.
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