Davos 2017: Error Analysis

24.01.2017

The World Economic Forum held in Davos on January 17 to 20 analyzed global economic errors made by individual countries.

Changing priorities

The atmosphere in Davos in 2017 differed dramatically from the previous years, because the forum participants have accepted the emergence of new forces at work and leaders in the globalization process. Moreover, globalization seems to be reversing in the regions that used to drive globalization.

Another significant element in 2017 was that Chinese President Xi Jinping was the only leader of a major global power to attend the Davos forum. He said in his address that China was emerging as the defender of traditional values of openness and trade ties and indicated his country’s willingness for constructive cooperation with the United States.

The Davos forum reaffirmed the growing belief that globalization has slowed down and may even be reversing its movement in many industrialized countries, ceding leadership in integration, liberalization and openness to East Asia, namely China and the ASEAN economies. This is powerful evidence of change in the global economic development guidelines and vectors.

Error analysis

Discussions of a growing technology lag are gathering momentum in Russia. This issue was discussed in Davos and at a recent Gaidar Forum in Moscow. The traditional discussions of macroeconomic parameters, which need adjusting, were overshadowed by debates about the Fourth Industrial Revolution, human capital, and whether Russia should adapt to this process or try to become one of its leaders.

The 2017 Davos forum focused on changes in the global economy. Experts analyzed the reasons for the globalization gaps that became glaring in 2016, the development of human capital, and public involvement in economic development. Over half of the forum’s sessions were devoted to these issues.  

In other words, the forum analyzed global economic errors made by individual countries. The questions raised in Davos did not surprise anyone. How to improve interaction between countries in order to stabilize economic development and prevent identity crises in the global economy? How to settle economic problems in the main centers of economic power: the United States, Europe and Asia?

Russia’s place in the global economy

In Russia, the above trends highlight the importance of a more proactive and targeted foreign economic policy aimed at creating strategic alliances in technology, at the industry-specific level and at the level of large corporations and even countries.

Russia, which joined the globalization process later than the other countries represented at Davos, should respond to global challenges not by self-isolation and import substitution but by closer integration into the global economy and a more diversified and economically friendly foreign policy.

The trends of the past few years and the growing interest in signing trade alliances with the Eurasian Economic Union (EAEU) shown by global economic powers, including technology leaders such as Israel and South Korea, which are negotiating a large economic agreement with the EAEU, offer opportunities for stimulating technological development.

Such opportunities also exist in relations with Western countries, and they will likely improve. In the past decade, the West was Russia’s key partner in technology cooperation, and so it would not be wise to abandon cooperation with the West in favor of exclusive relations with the East.

Russia has a chance

Despite the challenging external environment, Russia demonstrated sustainable development last year. Its economy has stabilized and is expected to resume growth in 2017, and its inflation rate will most probably reach a historical low. Compared to the economic plunge it took in 2015, Russia has shown signs of recovery, including in terms of foreign direct investment.

However, it will take several more years to return to the pre-crisis level of cooperation with Western countries, including in technology exchange. But these ties will be gradually restored, providing a positive impetus to Russia’s economic development in the next few years.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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