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BW Businessworld

Who Is In Charge?

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Who is leading the world now? Until a few years this question was easy to answer. US. EU. China. Any or all of these answers would be deemed correct, even if unacceptable. Today all and none of these answers seem even correct.

None of these economic giants are in a position to lead the world. Sure, they are important enough to influence the direction and quality of growth. All of them are not just too weak and beset with their own issues, but they are actually creating problems for the rest of the world.

So is anyone really in charge?

This question gains importance especially since the outlook for 2013 is not much brighter than the previous years. Some level of uncertainty is reduced with new leadership in China and US. But many troubling trends have been predicted by the members of the Global Agenda Council of the World Economic Forum. The survey can be read here.

These members are about 1,000 leaders of civil society, government, media, industry and academia. Divided in groups that cover issues, industries and regions, the network of the councils met for the annual summit in Dubai last week.

Not surprisingly issues of climate change, unemployment and inequality are not in the top five concerns. These important issues have been overtaken by issues that are more urgent. The stumbling Eurozone is the biggest concern. Related themes of unstable global economy, global power shifts and scarcity of resources are top worries. The only positive theme is the digital and communications revolution.

Unless these worries are addressed and resolved the deeper and long term issues of sustainability and inequality will remain neglected.

An interesting aspect of the survey was sifting hype from substance. The council members felt that importance and impact of some issues was overestimated. These include shift towards sustainable energy, rise of social gaming and even the rise in extremism. They felt that a lot of attention was being to these issues while the real problems remained inadequately addressed.

The issues that have been underestimated include growing income disparity, increased resource scarcity and cyber risk. The first of these issues arise from population growth and increased per capita consumption of resources. The rich countries club Organisation for Economic Cooperation and Development (OECD) admits that disparity has widened in the past two years. The average income of richest 10 per cent is nine times that of the poorest 10 per cent.

To return to the original question now. Who will then address these issues and work towards a solution?
The existing mechanism of global governance has lost a lot of credibility. The World Bank Group, the UN and other institutions like WTO seem to be redundant or out of touch with the new reality. More importantly, they are run by US and EU who no longer can claim superiority in matters of world management. Also, the US and EU steadfastly refuse to democratise these institutions. They continue to be run them as fiefdoms. As a result, the newly confident emerging economies are not ready to accept all the solutions offered by these institutions. Without a say in global affairs countries in Africa and Asia will not accept the direction decided by an outdated framework of global governance.

BRICS countries feel they don’t need lessons in economic and social management from those responsible for the financial crash and Eurozone crisis.

The Group of 20 or G20 was created to create a more inclusive and egalitarian framework for addressing global concerns. But G20 remains more reactive than proactive. It still does not have the statutory standing to drive change.

What happens now? The problems have been clearly identified. The solutions can be found. The question of who will get the world together to address these issues remains. The answer to this question will decide the future of global growth and development.

(Pranjal Sharma is a senior business writer. He can be contacted at [email protected])