The global Indian tycoon, Gautam Adani
The World Economic Forum has a challenge. Be it the ease of availability of information, live streaming making it more comfortable to watch and multitask, climate change leading to less snow on the slopes, nervous travelers, and a war that has no end in sight – all of this is leading to a loss in momentum for what used to be the premier thought leadership event in the world. Perhaps for the first time ever, the only G7 leader present was the German Chancellor.
Restaurant Seating as a Predictor of Times to Come
The surest sign I noticed was the easy availability of seating in any restaurant that we walked into. We were welcomed with open arms as against being told that we should reserve a year ahead (Yes – this is what we were told at pre-Covid Davos!). That being said, there can be no denying the fact that Davos is still a huge draw and is fast morphing into a premier business networking conference.
Globalization in Tatters?
But then, who would have imagined that the world would change so drastically in this short span of time and that we would shift from discussing ‘Globalization 4.0’ at Davos 2019 (that was supposed to have rewritten the rules of the global economy) to discussing ‘Cooperation in a Fragmented World’ in Davos 2023?
The rules did get rewritten – but in a totally unanticipated way. This onslaught of multidimensional risks is unprecedented, and their confluence creates a far bigger compounding effect or a ‘polycrisis’ – a term that was coined in the 1990s and was broadly covered in the World Economic Forum’s Global Risks Report for this year. (The WEF defines it as “a cluster of related global risks with compounding effects, such that the overall impact exceeds the sum of each part.”)
Going into WEF ’23, I was surprised to read about massive layoffs by the “infallible” tech industry and economists’ warnings about the global recession in the third quarter of 2023. These days, the quality of the economists’ predictions is as good as my skiing skills. Both are on slippery slopes. Besides the ongoing geo-economic fragmentation and weaponization of economic policies, we are witnessing the Great Fracture (a term coined by the UN Secretary General) – the decoupling of China and the US, which has massive knock-on global consequences and will severely dilute economic globalization.
All this means that conventional trade patterns will transform as the parts of the western world attempt to reduce their reliance on both Russia and China. Needless to say, this becomes an opportunity for India and other ASEAN countries to benefit from the diversification of supply chain risks that can be expected.
The Implications of the Polycrisis and New Geopolitical Couplings
From a meetings perspective, this was perhaps my busiest WEF as I met over a dozen heads of state and several business leaders. From this vantage point, I had a chance to make a few observations that I would like to summarize.
First, the new geopolitical couplings and its implications. Global alliances are now issue-based rather than allegiance-based. A very interesting remark made by Saudi Arabia’s Finance Minister that gave both China and the US ‘very important’ status highlights how fast geopolitical couplings are evolving. The past is no longer a predictor for the future, as no country wants to make just a single bet. Each country is seeking its own form of self-reliance, something we Indians call Atmanirbharta. In this context, I must say that in the meetings I had with the senior leaders of NEOM and Saudi Arabia, the vision of NEOM that aims to redefine “livability” is simply stunning in its scale and scope and will set an unprecedented benchmark in the years to come. It is a rallying cry for the quality of integrated infrastructure that the rest of the world aspires to build.
Climate Change and Tight-Lipped Evangelists
Second, while climate change remains the top priority and risk for the global community, it is clear that climate investments will be driven by the energy security agenda and self-interest. It was evident this year that the façade of just focusing on green energy has been blown away by the European energy crisis. While the climate warriors may remain tight-lipped, there is recognition that we need a pragmatic energy transition plan that includes fossil fuels to achieve inclusive growth. The US Inflation Reduction Act has prompted Europe to develop its own green package to prevent outbound migration of technology, money and expertise. My discussions made it evident that Europe’s reactionary move is motivated more by concern for its own energy security and the protection of its industries than by a desire to steer the global green transition. In many ways, the divide between the US and Europe could not be more evident as both pursue their own national agendas while still claiming alignment. In my view, there is nothing wrong in doing so.
Chatting up AI
Third is all the discussions at the WEF around advancements in AI or, to be more precise, we should call it generative AI. It was the buzzword at this year’s event. The recent release of ChatGPT (I must admit to some addiction since I started using it) is a transformational moment in the democratization of AI given its astounding capabilities as well as comical failures. But there can be no doubt that generative AI will have massive ramifications. Nearly five decades ago, the pioneering of chip design and large-scale chip production put the US ahead of rest of the world and led to the rise of many partner countries and tech behemoths like Intel, Qualcomm, TSMC, etc. It also paved the way for precision and guided weapons used in modern warfare with more chips mounted than ever before. Generative AI holds the same potential and dangers, and the race is already on, with China outnumbering the US in the number of most-cited scientific papers on AI. In fact, Chinese researchers in 2021 published twice as many academic papers on AI as their American counterparts. This is a race that will quickly get as complex and as entangled as the ongoing silicon chip war.
Decoupling and Recoupling
Lastly, it was increasingly evident in my discussions with the heads of states that onshoring, self-reliance, energy independence, and building resilience in supply chains is as mandatory as is local job creation. While we can agree to this in theory, I am returning a little more uncertain about the state of globalization than when I got to Davos given that it is almost impossible for a country or a company to decouple itself and become completely self-reliant. It would be too draining and prolonged. However, this may not be necessarily bad in the long run for our part of the world as India, Brazil, the Middle East, ASEAN, and African nations, will all find opportunities to expand by stepping into trade vacuums created as a result of the decoupling.
The Indian Summer
While the origins of the term Indian Summer lie in regions inhabited by Native Americans, it does appear that India is advantageously positioned away from frozen slippery slopes and may be the primary bright spot among several large economies. We had turned out in full force despite all the challenges I highlighted at the start. Our multi-vector, non-partisan approach has ensured that we are well-respected and have become one of the leading voices batting for the emerging economies. The growing prominence was very visible during the forum, with widespread participation by Indian companies and government officials.
In this context, I must compliment the Government of India and the Confederation of Indian Industry (CII). The way they always come together before the event and meticulously set up calls with the participants to be aligned with the messaging is just a sign of India’s strength in governance. If we look at history, the countries that rose to economic and geopolitical prominence had their governments and businesses working closely towards a common vision, be it the US, Japan, South Korea, or Singapore. It’s now on us to do the same to ensure that the 21st century belongs to India!
While I am unsure how much of the pristine white snow will vanish exposing the brown of the Swiss alps, I am confident that the percentage of my country’s women and men participating at the World Economic Forum will continue to increase. Perhaps we can start calling the WEF ‘the Indian Summer’ in Davos.
(Gautam Adani)
