Davos 2014: Optimism with a healthy dose of reality
By Gary Coleman - January 28, 2014
With economic recovery seeming to finally take hold this year, I was not surprised that many of the Davos 2014 speakers sounded a positive note for the future. Nowhere was this more evident than in the remarks from country leaders. But these leaders understood that there is still a lot of work to be done—and it was striking how in sync they were when it came to the challenge going forward: building and sustaining growth.
South Korea is focusing on entrepreneurship and building a “creative economy,” where individuals are encouraged to start businesses and put “innovation into action,” according to President Park Geun-hye. Similarly, Liberia is making strategic investments in education and focusing on public-private partnerships to spur the rise of small and medium businesses. Mexico is working to promote start-ups by reforming fiscal policies to allow greater access to credit.
Many countries are also focusing on regulations that promote business. In Japan and the United Kingdom, the corporate tax rate has been rolled back. Mexico has passed energy reforms that will open up oil and gas for private investment. Mexico is also, along with the UK, liberalizing labor regulations to make the job market more flexible. Australia is repealing burdensome taxation like its carbon and mining taxes.
But the most striking refrain from these heads of state is a new dedication to reach across borders and embrace the growth opportunities that globalization presents. Leader after leader touted free-trade agreements, foreign direct investment, and a rolling back of protectionist measures. “It is time to overcome defensive postures and recognize the role of international trade in the global recovery,” said Brazil’s President Dilma Rousseff.
And it wasn’t just emerging markets. The well-established economies of the UK and Japan are seeking out FDI, negotiating new trade deals, and reforming polices that prop up domestic industries. Shinzo Abe promised reform of 40-year-old rice market protections as well as continued dedication to the Trans-Pacific Partnership. “Companies and people from abroad will find Japan among one of the most business-friendly places in the world,” he said. Likewise, David Cameron asserted that the UK is not going to “put up the drawbridge” in response to globalization and is actively seeking foreign investment and “championing” trade deals with Canada, the United States, and Asia.
With all this emphasis on growth at Davos, it’s no wonder that so many of the World Economic Forum regional summits in the coming year will focus on building growth. I am looking forward to how the agendas, speakers, and themes for the upcoming summits in Panama, Nigeria, and the Philippines, will develop this theme—and I will report back on the status of reforms as well as their impact. It will be interesting to see if at the regional level the optimism about growth will continue. Let’s hope so.
Gary Coleman is Managing Director, Global Industries, of Deloitte Touche Tohmatsu Limited. He is a member of Deloitte’s Global Markets Committee and is the lead partner in Deloitte’s strategic relationship with the World Economic Forum. Follow him on Twitter @gcoleman_gary.