At a time of heightened economic uncertainty, the Growth Summit brought together more than 400 leaders in Geneva, Switzerland, to deepen understanding of the new context for growth and to chart a future of growth that is resilient, sustainable and inclusive.
A new context for jobs and economic growth
Experts are divided about the prospects of a recession in 2023, according to the Chief Economists Outlook, launched at the summit, with 45% expecting a recession and an equal number expecting to avoid one. At the summit, trends that are expected to shape growth most profoundly in the coming year included geo-economics and a changing geography of supply chains, rapid advancement and adoption of technology – including generative AI – and stronger industrial policy, especially measures to enable greener growth and the energy transition.
“Economic growth is necessary, but it’s not an end in itself. The key question is, what kind of growth do we want? The answer is, it must be resilient, equitable and sustainable growth,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.
The localization and diversification of supply chains is expected to create a new geography of growth, new jobs and opportunities for small- and medium-sized enterprises and new entrants. However, the global movement of people and exchange of goods, services, technology and ideas remains fundamental to growth and prosperity for developing economies, addressing inequality, expanding living standards for all and addressing the climate crisis.
“Poverty anywhere is a threat to prosperity everywhere,” said Gilbert Houngbo, Director-General, International Labour Organization.
“We have gone through a big wave of globalization and we have left too many people behind. If you read the story of industrial towns all over the world, people were left behind,” said Sander van ’t Noordende, Chief Executive Officer and Chair of the Executive Board, Randstad “It’s the right thing to make sure that that doesn’t happen again, and it is needed because we need all hands on deck.”
Nearly a quarter of all jobs – 23% – are also expected to be disrupted over the next four years, according to the Future of Jobs Report, released just ahead of the summit. Sustainability and green investments are expected to be a net job creator while tepid economic growth, supply shortages and high inflation are seen as the biggest risks to job growth. The impact of artificial intelligence was widely debated, with polarized views on its potential for fully displacing lower-skilled, white-collar work or augmenting workers’ productivity in various professions with faster access to knowledge.
Imperative for inclusive, resilient and sustainable growth
Leaders from business, government, unions, academia and civil society agreed that a renewed push for growth is needed to raise living standards across the world. But they also cautioned against focusing solely on GDP growth, calling for greater integration of other urgent priorities including tackling the climate crisis, reducing inequality, building societal resilience and managing the disruptive power of new technologies.
“My hope is that we can find big opportunities from the exploration of alternative drivers of growth, such as intra regionalization, that have been untapped. This is how we keep global growth going,” said Razia Khan, Head of Research and Chief Economist, Africa and Middle East, Standard Chartered Bank.
“There is enormous inequality in productivity,” said Ricardo Hausmann, Founder and Director of the Growth Lab, Harvard University. “People in different locations are baking pies of radically different sizes. The process of development is a process of transformation of the way we do things, the way production is organized so that the whole can be more productive.”
“The pursuit of green technology is in the forefront of our minds,” said Mmusi Kgafela, Minister of Trade and Industry, Botswana. “But it has to be a just transition.”
Rania Al-Mashat, Minister of International Cooperation, Egypt, emphasized the need for financing in the developing world. “For just transitions to happen, we need just financings.”
A key element in the new agenda for growth is the need for significant investment in skills in both advanced and emerging economies to build competitiveness and to prepare workers for the jobs of the future.
“AI won’t take your job – it’s someone using AI who will take your job,” said Richard Baldwin, Professor of International Economics, Graduate Institute of International and Development Studies in Geneva.
“We know the jobs that we’ll lose, the jobs that we need and someway we have to make it work” said Claudia Azevedo, Chief Executive Officer of SONAE, as part of a discussion on the importance of closing the skills gap through upskilling and reskilling.
“We are nowhere near where we need to be to meet the scale and the speed of the demand that is coming our way for green skills. We need to start investing now – and heavily – to put the reskilling and upskilling programmes in place needed to meet the climate challenge,” said Sue Duke, Head of Global Public Policy, LinkedIn.
“When you look at care jobs – both childcare and elderly care – we still see elevated demand compared to pre-pandemic levels,” said Svenja Gudell, Chief Economist, Indeed.
Leaders also emphasized the importance of diversity and inclusion as a channel to both promote equity and to accelerate growth and innovation.
“Diversity of ideas is essential,” said Maria Leptin, President, European Research Council. “You don’t stew in your own juice. If you do, you are not going to discover anything new.”
“Building resilience requires encouraging women and talking about their strengths,” said Zubaida Bai, President and Chief Executive Officer, Grameen Foundation. “Investing in the power of these women is actually what’s going to help build a resilient economy.”
An action agenda for jobs, trade, skills and equity
Over 20 high-impact initiatives were advanced at the summit, with a focus on educating, reskilling and upskilling workers for the future of jobs. These include:
A new trade and labour programme was launched to improve worker standards and human rights in global supply chains. The programme, developed with the Graduate Institute’s Thinking Ahead on Societal Change Platform in Geneva, brings together business leaders, experts, human rights, trade and labour leaders.
The Government of Morocco established the first Jobs Accelerator, part of a network of more than 30 country accelerators working with the World Economic Forum to advance a new economy and society. Jobs Accelerators will bring public and private sectors together to future-proof labour markets, create good-quality employment opportunities and help people transition in the jobs of tomorrow. As a member of the Jobs Consortium, the Government of Guatemala also intends to collaborate with the Forum to establish a Jobs Accelerator through the Ministry of Economy.
Members of the Good Work Alliance – jointly employing 2.5 million workers – published a toolkit and set new targets to promote fairness on wages and technology, provide flexibility and protection, drive health, inclusion and development opportunities for its employees.
A new Workforce Health Initiative was launched, aiming to establish a community of purpose to improve employee health and promote societal resilience through a global and scalable platform that synthesizes and promotes proven holistic evidence-based solutions. A global Community of Chief Health and Medical Officers will work to establish public-private partnerships and scale concrete actions companies can take to advance health in the workplace.
UNHCR and Ingka joined as Co-Chairs of the Refugee Employment Alliance, which aims to employ 14,000 refugees by the end of 2023.
The Global Future Council on Job Creation will work to identify pathways to job creation, including green, tech and social investments. A briefing paper was released to prepare the work of the council.
Nigeria and Mongolia joined the Reskilling Revolution, establishing Skills and Education Accelerators. Launched in 2020, the Reskilling Revolution has already reached 350 million people through the initiatives of its partners and members to provide better education and reskilling opportunities. The Government of the United Arab Emirates signed an agreement to globally scale up the Reskilling Revolution in its next stage of work during 2023-2025 to reach 600 million people
In collaboration with PwC, the Forum launched a new framework to develop a skills-based labour market and help 100 million have better jobs and economic opportunities.
Code.org launched a new coalition of education and technology leaders – TeachAI – in collaboration with the World Economic Forum that aims to provide much-needed global guidance on integrating AI effectively in global primary and secondary education to promote future-ready skills.
The Government of Kenya launched a Gender Parity Accelerator, joining a network of 14 countries that are working to advance women’s economic participation and leadership, ensure pay equity and prepare women for the future of work.
The World Economic Forum will launch a Global Gender Parity Sprint, bringing together a multistakeholder coalition to accelerate economic gender parity and parity in leadership by 2030.
A Women’s Health in the Workplace coalition was launched that aims to understand and identify actions that employers can take to provide better support and care for women in the workplace.
The Forum launched its 2023-2024 Diversity, Equity and Inclusion Lighthouses Programme, with a call for companies to submit impactful initiatives to inspire global business action on DEI.
Members of the Partnering for Racial Justice in Business Initiative kicked-off a series of dialogues to implement racial and ethnic equity, building on the initiative’s Global Racial and Ethnic Equity Framework and previous research.
The Zero Health Gaps Pledge announced that some 63 organizations have now pledged to advance health equity through their core operations, investments and strategies.
Russian response to sanctions: billions in dollar terms are stuck in Russia
“Tens of billions in dollar terms are stuck in Russia,” the chief executive of one large company domiciled in a country told ‘The Financial Times’. “And there is no way to get them out.”
Western companies that have continued to operate in Russia since Moscow’s invasion of Ukraine have generated billions of dollars in profits, but the Kremlin has blocked them from accessing the cash in an effort to turn the screw on “unfriendly” nations.
Groups from such countries accounted for $18 billion (€16.8 billion) of the $20 billion in Russian profits that overseas companies reported for 2022 alone, and $199 billion of their $217 billion in Russian gross revenue.
Many foreign businesses have been trying to sell their Russian subsidiaries but any deal requires Moscow’s approval and is subject to steep price discounts. In recent days British American Tobacco and Swedish truck maker Volvo have announced agreements to transfer their assets in the country to local owners.
Local earnings of companies from BP to Citigroup have been locked in Russia since the imposition last year of a dividend payout ban on businesses from “unfriendly” countries including the US, UK and all EU members. While such transactions can be approved under exceptional circumstances, few withdrawal permits have been issued.
US groups Philip Morris and PepsiCo earned $775 million and $718 million, respectively. Swedish truck maker Scania’s $621 million Russian profit in 2022 made it the top earner among companies that have since withdrawn from the country. Philip Morris declined to comment. PepsiCo and Scania did not respond to requests for comment.
Among companies of “unfriendly” origin that remain active in Russia, Austrian bank Raiffeisen reported the biggest 2022 earnings in the country at $2 billion, according to the KSE data.
US-based businesses generated the largest total profit of $4.9 billion, the KSE numbers show, followed by German, Austrian and Swiss companies with $2.4 billion, $1.9 billion and $1 billion, respectively.
‘The Financial Times’ reported last month that European companies had reported writedowns and losses worth at least €100 billion from their operations in Russia since last year’s full-scale invasion.
German energy group Wintershall, which this year recorded a €7 billion non-cash impairment after the Kremlin expropriated its Russian business, has “about €2 billion in working interest cash… locked in due to dividend restrictions”, investors were told on a conference.
“The vast majority of the cash that was generated within our Russian joint ventures since 2022 has dissipated,” Wintershall said last month, adding that no dividends had been paid from Russia for 2022.
Russian officials are yet to outline “a clear strategy for dealing with frozen assets”, said Aleksandra Prokopenko, a non-resident scholar at the Carnegie Russia Eurasia Centre. “However, considering the strong desire of foreign entities to regain their dividends, they are likely to explore using them as leverage – for example to urge western authorities to unfreeze Russian assets.”
Transforming Africa’s Transport and Energy Sectors in landmark Zanzibar Declaration
A special meeting of African ministers in charge of transport and energy held from 12-15 September on the theme, “Accelerating Infrastructure to Deliver on the AU Agenda 2063 Aspirations” has concluded with an action-oriented Zanzibar Declaration aimed at spurring the Continent’s transport and energy sectors.
Convened under the auspices of the African Union’s Fourth Ordinary Specialized Technical Committee on Transport, Transcontinental and Interregional Infrastructure and Energy, the meeting was organized by the African Union Commission (AUC) in collaboration with the African Union Development Agency (AUDA-NEPAD), the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (ECA).
Speaking at the Ministerial segment of the meeting, Robert Lisinge, Acting Director of the Private Sector Development and Finance Division at the ECA called on member states to address the barriers limiting private sector investments in infrastructure and energy, urging them to facilitate investments by creating conducive policy and regulatory environments. “The requirements of continental infrastructure development and the aspirations of Agenda 2063 and Agenda 2030 far exceed current levels of public sector investment,” he said.
He stressed that over the next ten years, there is a need for concerted action to address energy transition and security issues, in order to open up opportunities for the transformation of the continent. He cited ECA’s analytical work on the AfCFTA, which demonstrates there are investment opportunities for infrastructure development in the area of transport and energy and added that digitization and artificial intelligence offer great opportunities for the efficient operation of infrastructure.
According to the Zanzibar Declaration, the Ministers adopted the AUC and ECA continental regulatory framework for crowding-in private sector investment in Africa’s electricity markets. This framework will be used as an instrument for fast-tracking private sector investment participation in Africa’s electricity markets. The Declaration also called on ECA and partners to develop a continental energy security policy framework as called for by the 41st Ordinary Session of the Executive Council and an Energy Security Index and Dashboard to track advancements in achieving Africa’s energy security.
The meeting acknowledged the efforts by ECA to support Member States in coordinating Public-Private Partnerships (PPP) with development partners and the establishment of the African School of Regulation (ASR) as a pan-African centre of excellence to enhance the capacity of Member States on energy regulation.
The Declaration requested the ECA and partner institutions to further act in the following areas:
The AUC, in collaboration with AUDA-NEPAD, ECA, AfDB, RECs, Africa Transport Policy Programme (SSATP), and the African Continental Free Trade Area (AfCFTA) Secretariat to implement the roadmap on the comprehensive and integrated regulatory framework on road transport in Africa.
ECA, in collaboration with AUC, to identify innovative practices and initiatives that emerged in the aviation industry in Africa during the COVID-19 pandemic and propose ways of sustaining such practices, including the development of smart airports with digital solutions for improved aviation security facilitation and environmental protection.
ECA, in collaboration with AUC, to establish mechanisms for systematic implementation, monitoring and evaluation of continental strategies for a sustainable recovery of the aviation industry.
The AUC, AUDA-NEPAD, AfDB and UNECA to engage with development partners and Development Finance Institutions (DFIs) to mobilize resources for projects preparation and implementation of PIDA-PAP 2 projects.
ECA and AUC, in collaboration with partners, to coordinate PPP initiatives to avoid duplication of efforts and strengthen complementarity.
The AUC and ECA to work with continental, regional and specialized institutions to support the design and implementation of programmes, courses, and capacity development initiatives of the African School of Regulation (ASR) to support the implementation of the African Single Electricity Market and Continental Power System Master Plan.
The AUC to work with AUDA-NEPAD, AfDB, ECA and RECs, respective power pools, regional regulatory bodies, and relevant stakeholders to design continental mechanisms for regulating and coordinating electricity trade across power pools.
AUDA-NEPAD, AUC, AFREC, ECA, AfDB, Power pools and development partners to comprehensively assess local manufacturing of renewable energy technologies and beneficiation of critical minerals for battery manufacturing.
ECA and AFREC to accelerate the implementation of the Energy4Sahel Project to improve the deployment of off-grid technologies and clean cooking in the affected Member States.
World Trade Report 2023: “re-globalization” amid early signs of fragmentation
The 2023 edition of the WTO’s World Trade Report presents new evidence of the benefits of broader, more inclusive economic integration as early indications of trade fragmentation threaten to unwind growth and development.
“The post-1945 international economic order was built on the idea that interdependence among nations through increased trade and economic ties would foster peace and shared prosperity. For most of the past 75 years, this idea guided policymakers, and helped lay the foundation for an unprecedented era of growth, higher living standards and poverty reduction,” WTO Director-General Ngozi Okonjo-Iweala says in her foreword to the report. “Today this vision is under threat, as is the future of an open and predictable global economy.”
In introducing the report at the opening of the WTO’s annual Public Forum on 12 September, WTO Chief Economist Ralph Ossa said: “In particular, the report makes the case for extending trade integration to more economies, people, and issues, which is a process that we call “re-globalization.”
Starting with an analysis of the current state of globalization, the report confirms that geopolitical tensions are beginning to affect trade flows, including in ways that point towards fragmentation of trading relationships. WTO Secretariat calculations find, for example, that goods trade flows between two hypothetical geopolitical blocs — based on voting patterns at the UN General Assembly — have grown 4-6 per cent more slowly than trade within these blocs.
However, the report contends that, despite these findings, international trade continues to thrive, implying that talk of de-globalization is on balance still not supported by the data. The publication points to the expansion of digital services trade, environmental goods trade, and global value chains in addition to the resilience of trade to recent global crises.
The report goes on to examine the relationship between economic integration and three major challenges facing today’s global economic order: security and resilience, poverty and inclusiveness, and environmental sustainability — areas in which arguments have gained ground that globalization has not delivered as expected or exposes countries to excessive risks.
Looking at the evidence, the report makes the case that “re-globalization,” which is the renewed drive towards integrating more people, economies and pressing issues into world trade, is a more promising solution to these issues than fragmentation.
The report shows that trade openness is strongly linked with a reduced likelihood of conflict and has led to sharp declines in poverty for over four decades. Also, technology improvements enabled by trade have had a strong impact in reducing carbon emissions.
WTO trade monitoring data shows, for instance, how the onset of the war in Ukraine was followed by an increase in export restrictions, a trend also observed during the COVID-19 pandemic. Export restrictions on critical raw materials have increased more than five-fold in the last decade.
Figure C.3 displays the share of trade affected by sanctions using the Global Sanction Database (GSD) which includes data on trade sanctions from one economy to another by year.
East Asia3 days ago
Al-Assad’s Beijing Visit: A Stepping Stone to a Strategic Partnership Between the Two Nations
Finance4 days ago
Bloomberg: Russian budget swings to surplus in spite of sanctions
Economy3 days ago
IMF Conditions vs. Pakistan’s Economic Future
Economy3 days ago
Why Global Goals Are Global Holes in Need to Be Filled With Entrepreneurialism?
World News4 days ago
WSJ: West fails to peel Russia’s friends away to Ukraine’s side
Tech News4 days ago
Generative AI to Enhance Creativity, Automate Routine Tasks for Future Jobs
Middle East3 days ago
Iran and Sudan’s Rapprochement in 2023: New Changes in the Regional Geopolitics of the Middle East
World News4 days ago
China has the capacity to build combat ships at 200 times the rate that the US can