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World Economic ForumAnnual Meeting 2010Improve the State of the World: Rethink, Redesign, Rebuild

Davos-Klosters, Switzerland 27-31 January

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The views expressed in this publication do

not necessarily reflect those of the World

Economic Forum.

World Economic Forum

91-93 route de la Capite

CH-1223 Cologny/Geneva

Switzerland

Tel.: +41 (0)22 869 1212

Fax: +41 (0)22 786 2744

E-mail: [email protected]

www.weforum.org

2010 World Economic Forum

All rights reserved.

No part of this publication may be reproduced ortransmitted in any form or by any means, including

photocopying and recording, or by any information

storage and retrieval system.

REF: 150410

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Preface page 3

Outcomes and Highlights page 4

Strengthening Economic and Social Welfare page 6

Creating a Values Framework page 10

Ensuring Sustainability page 14

Mitigating Global Risks and Addressing Systemic Failures page 20

Enhancing Security page 24

Building Effective Institutions page 28

IdeasLab page 32

Acknowledgements page 34

Contents

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5/38World Economic Forum Annual Meeting 2010 | 3

Preface

In my opening remarks at the 40thAnnual

Meeting of the World Economic Forum,

I expressed deep concern that 2010

could evolve into a year of social crisis

following the financial crisis of 2008

and the economic crisis of 2009.Governments in particular risk becoming

overwhelmed by domestic concerns

to such an extent as to limit the global

stewardship which is desperately needed

today. Such an outcome would also set

the stage for a future generational crisis

as fiscal burdens as well as political

cynicism would disproportionately

spread across the younger generation.

Therefore, the discussions at the

Annual Meeting in Davos were driven

by the realization that assumptions

about the future are changing at every

level of global society. But will they

lead us to better decisions, actions

and outcomes going forward? This

was the critical question at the top of

our stakeholders' minds at the Annual

Meeting 2010 of the World Economic

Forum. And this was why the Meeting

was organized under the theme

Improve the State of the World:

Rethink, Redesign, Rebuild.

As you read this summary of our 40 th

Annual Meeting, I encourage you to

reflect on what will be the major global

challenges 40 years into the future as

the worlds population increases from

6 to 9 billion people. How will existing

models of business, governance,

development, employment, education

and corporate citizenship need to

adapt and evolve? Will our childrenschildren be speaking of the G2, G7,

G20 or G77 when discussing the

management of global issues?

Improving the state of their world was

what brought together leaders from

industry, government and civil society

to rethink, redesign and rebuild in Davos.

Driving the rethink was the Network of

Global Agenda Councils, comprised of

over 1,000 experts active in 76 Councils,

created to advance solutions to critical

global challenges. The councils met at

the Summit on the Global Agenda in

November 2009 and their

recommendations were integrated into

discussions in Davos. Redesign-

oriented sessions leveraged the work

of the Global Redesign Initiative

(GRI), an ongoing multistakeholder

dialogue focusing on adapting

structures and systems of international

cooperation to the challenges of the

21st century. The effort to rebuild trust

and confidence now extends beyond the

Annual Meeting via www.welcom.org,

a collaborative platform to build

knowledge and to share insights as an

online community throughout the year.

The failure to reach a global solution to

climate change last year in Copenhagen

is a grim reminder of the inertia and

interests to overcome in a world of 6

billion. The world of 9 billion will require

even greater leadership in creatinginnovative business models, new

technologies, reshaping consumer

behaviour and creating job

opportunities that are driven by

sustainability. The 40thAnnual Meeting

is just one milestone in the World

Economic Forums ongoing effort to

ensure that the world will be in a

better condition tomorrow than it is

today.

Klaus Schwab

Founder and Executive Chairman

World Economic Forum

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In his opening address at the 40thAnnual

Meeting, President Nicolas Sarkozy of

France underscored that it will not be

possible to emerge from the globaleconomic crisis and protect against

future crises if the economic imbalances

that are at the root of the problem are

not addressed. Countries with trade

surpluses must consume more and

improve the living standards and social

protection of their citizens, he remarked.

Countries with deficits must make an

effort to consume a little less and repay

their debts. These twin challenges

were the focus of much debate inDavos. President Sarkozy argued in this

context for a new Bretton Woods and

pledged that France would place the

reform of the international monetary

system on the agenda when it chairsboth the G8 and G20 in 2011.

The leaders of Canada and the Republic

of Korea, current chairs of the G8 and

the G20 respectively, arrived in Davos

to build support for the global agenda

in 2010. It is important that the G20

reach out to those not taking part, listen

to their needs and reflect them in our

discussions. Otherwise, it will not be

effective, said Lee Myung-Bak, Presidentof the Republic of Korea; and host of

the 2010 G20 Summit. Stephen Harper,

Prime Minister of Canada and host of

the 2010 G8 Summit acknowledged

that world leaders disagree over climatechange, trade and measures to safeguard

the global financial system. In his view,

to square national interests with global

interests, it is necessary to recognize

first the legitimacy of the others point

of view.

Harpers point reminded participants of

why the international community failed to

come to an agreement on climate change

in Copenhagen. In Davos, PresidentFelipe Caldern of Mexico stressed

Outcomes and Highlights

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that Copenhagen proves that the

negotiation by consensus mechanism is

not working. Mexico will host the 2010

United Nations Framework Convention

on Climate Change Conference of the

Parties in November. In this context,

Caldern remarked that we have new

problems and we cannot tackle [problems

such as climate change] with instrumentsthat were created in 1945, and he

added that we need to create new

instruments for a new era. In this spirit,

the Forum released two reports in Davos,

Green Investing: towards a Low-Carbon

Energy Infrastructure and Green Investing

2010: Policy Mechanisms to Bridge

the Financing Gap, to promote new

solutions for both government and

industry to work in partnership.

President Jacob G. Zuma of South

Africa, when reflecting on the failure to

conclude the Doha Development Round

and the pervasive poverty affecting the

majority of the worlds population,

observed that we have structures that

were developed decades and decades

ago when circumstances were different.

He added, In the end, the majority of

the world does not have the right to

take decisions for themselves. We

have reached a point today when it is

time to rethink and redesign, including

decision-making processes of existing

organizations. To this end, the World

Economic Forum will convene relevant

policy-makers and experts from its

Global Agenda Councils for a Global

Redesign Summit on 30-31 May in

Doha, Qatar. The aim will be to convene

experts from governments, internationalorganizations, universities and think

tanks to examine gaps in international

cooperation and develop proposals to

overcome these shortcomings.

The Annual Meeting in Davos also

highlighted issues of strong unity of

purpose among members of the

international community. First and

foremost was the humanitarian and

development challenge facing Haiti. In aspecial session of the Annual Meeting,

former US President and current UN

Special Envoy to Haiti, William J.

Clinton made a strong call for

immediate aid and sustained

investment to assist Haiti as it

struggles to rebuild from the rubble of

the devastating earthquake of 12

January. Garnering support from the

international business community toprovide humanitarian and technical

assistance was an immediate priority in

Davos, but the longer term goal remains

increasing private sector involvement

to rebuild Haitis economy and to improve

the conditions for job growth. The

need to integrate the private sector to

bridge the gap between humanitarian

assistance and economic development

led to the creation of a Haiti partnership

between the Clinton Global Initiative,the United Nations and the World

Economic Forum.

Participants were reminded of the

importance and impact of long-term

development commitments by celebrating

an important 10th anniversary linked to

the World Economic Forum Annual

Meeting. The idea for a Global Alliance

for Vaccines and Immunisation (GAVI)

was conceived in Davos 10 years ago.

GAVI has since saved over 4 million

lives and has immunized an additional

256 million children in the world's poorest

countries. In Davos this year, Bill and

Melinda Gates, Co-Chairs of the Bill and

Melinda Gates Foundation, a founding

partner of the GAVI Alliance, pledged

US$ 10 billion to vaccinate over 8 million

children in the next decade. Melinda

Gates also served as a Co-Chair of theAnnual Meeting.

The spirit of Davos was also

exemplified in another celebration

South Africas World Cup Kick-Off as

participants celebrated the arrival of

the worlds greatest sporting event on

the continent of Africa.

Additional programme highlights

from the 40thAnnual Meeting of

the World Economic Forum are

accessible in multiple forms on our

website www.weforum.org

Readers interested in viewing the

major panel discussions are invited

to navigate a selection of webcastedsessions at http://wef2010.unitec-

media.tv/index.html

In addition, 80 of the 220 sessions

of the Annual Meeting were posted

to YouTube and can be viewed at

http://youtube.com/

worldeconomicforum

Written transcripts of specialmessages and selected panel

discussions can be downloaded at

http://www.weforum.org/en/events/

ArchivedEvents/AnnualMeeting2010/

Transcripts/index.htm

Summaries of various sessions,

workshops and sessions over

meals can be downloaded at

http://www.weforum.org/en/

knowledge/Events/2010/AnnualMeeting/index.htm

The IdeasLab once again generated

some of the most creative and

innovative ideas from Davos and

over 50 presentations can be viewed

at http://www.weforum.org/en/

events/ArchivedEvents/Annual

Meeting2010/IdeasLab/index.htm

Over 350 pictures from the

Annual Meeting photographed by

Swiss-Image are available at

http://www.flickr.com/

worldeconomicforum

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As participants gathered in Davos forthe World Economic Forum Annual

Meeting 2010, one common sentiment

resonated: Now what?

Much has changed since the dark days

of early 2009. While many risks and

structural problems remain, economic

Armageddon has been avoided and

the financial system saved. Relief that

the worst is over quickly yielded to

deep uncertainty about what the future

holds.

Top of mind were sweeping bank reformsannounced by the Obama Administration,

sovereign debt worries, inflation concerns

in China, unknowns regarding monetary

and fiscal exit strategies and ever-present

threats of social unrest and protectionism.

Rarely have world leaders had so

much on their plate.

How does the world chart a more

equitable and sustainable course for

global growth in 2010? How can

job creation and social welfare be

redesigned? How can long-term

economic growth be rebuilt on a solidfoundation? These questions were the

subjects of considerable debate.

A roadmap for sustainablerecovery in 2010

The global economy might be

technically out of recession, but

economists cautioned the recovery is

fragile and likely to be sub-par, with

slower GDP growth and higher

unemployment. The consensus for a

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Strengthening Economicand Social Welfare

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As we stand at a new historical

juncture, we must change the old

way of inefficient growth and

transform the current development

model that is excessively reliant on

investment and export.

Li Keqiang, Executive Vice-Premier, State

Council of the Peoples Republic of China

multi-speed recovery in 2010 was

captured by the acronym LUV: an L-

shaped recovery in Europe and Japan;

a U-shaped upturn in the US; and a V-

shaped revival in Asia. The debate

then focused on the size and speed of

the respective recoveries.

While countries such as China, India andBrazil have proven remarkably resilient,

they are not the primary drivers of global

demand. A healthy and self-sustaining

recovery requires deficit countries

such as the United States and the

United Kingdom to revive their own

economies and address structural

problems. In turn, surplus countries

China, Japan and Germany must

reorient away from export-led to

domestic consumption-driven models.

There is no shortage of nervousness.

The increase in reserve requirements

on Chinese banks sent a shiver through

financial markets on fears this might

mark the beginning of a sustained

tightening phase.

Meanwhile, mushrooming government

debt is causing angst in developed

countries. A fiscal crisis has already

erupted in Greece, and investors

worry if Spain, the United Kingdom,

Japan or even the US could follow

suit, as evidenced by widening bond

spreads.

While outright default is seen as unlikely,

sovereign risk could translate into a

highly disruptive set of deleveraging

dynamics. Worse, inflation expectationscould return with a vengeance. Some

participants warned that the next crisis

would be sparked by a government debt

trap unless strong fiscal discipline is

exhibited as economies recover. Belt

tightening was seen as the only option.

All the fuss could be much ado about

nothing several optimists contended,

but risk aversion remains high and a

sharp correction in risk assets is

underway.

The more pressing worry and

uncertainty is the timing and scale of

withdrawal of the massive monetary

and fiscal stimulus. The potential for

policy error is high, and the worlds

economic leaders were urged to

tread warily so as to avoid tipping the

economy back into a disastrous

recession.

Creating jobs andstrengthening social welfare

Job creation holds the key to a

sustainable recovery. It still feels like

a recession to many workers amid

continued job losses and meagre, if

any, gains in disposable income.

Global unemployment has risen byaround 50 million while working

poverty increased by 200 million,

coming on top of a crisis in the quality

of employment one-half of employees

globally remain in vulnerable

employment.

Without a return to growth in jobs

which is expected in 2011-2013 the

world risks political instability, populism

and destabilizing trade frictions. The

prospect of 10% growth in China and

10% unemployment in the US and

Source: IMF International Financial Statistics database; Thompson Datastream; PricewaterhouseCoopers analysis

Consumption in emerging and developed markets

Realannualgrowthinconsumptio

n,

nationalcurrencies,

2008prices

Consumption in emerging markets grew nearly fivepercentage points faster than developed markets in 2008

8%

6

4

2

0

1998

Note: Weighted average growth rates based upon country PPP weightings as a share of global GDP

1999 2001 20022000 2003 2004 2005 2006 2007 2008

Developed markets

Emerging markets

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Source: PricewaterhouseCoopers forecasts (November 2009)

US and China growth forecasts

AnnualGDPgrowth

Both the US and China are expected to grow faster thanother major economies

Forecast

9%

6

3

0

-3

-6

2008 2009F 2010F 2011F 2012F

Eurozone

Japan

UK

US

China

Europe could prove to be a volatile

combination. Heading off backlash will

require a sustained effort by both

government and business.

Achieving job recovery requires radical

thinking. Some participants called

on the G20 to set up a multilateraltask force on employment and social

protection to focus on job retention,

retraining trade-displaced workers and

enhancing labour market flexibility.

Others proposed focused on the need

for micro-measures such as tax breaks

for small and medium businesses, the

most important source of new jobs.

Rebuilding sustained,

long-term economic growth

Participants stressed that sustainablepost-crisis growth requires a break

from the past. Three specific action

areas stood out. First, rethink trade

negotiations. A new trade paradigm

is required that encourages structural

US and China emissions reductions

A low carbon economy depends on China and the USincreasing their emissions reductions

Source: "Do the numbers add up?" PricewaterhouseCoopers (December 2009).

Annualemissionsintensitychange

0

-1

-2

-3

-4

-5%US

Pledged absolute cut2005-20: 17%

China

Pledged intensity cut2005-20: 40-45%

* Estimated required cuts in emissions intensity in order to limit global warming to 2 C.Emissions intensity" refers to emissions per unit of GDP

1990-2005 2005-082008-20required*

If we don't have jobs, there is no

sustainable way of rebalancing the

global economy.

Sharan Burrow, President, International

Trade Union Confederation (ITUC)

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reforms within emerging economies

that open their markets (aid for

trade) along with a pragmatic

variable geometry for the World

Trade Organization, with groups of

countries able to cut separate deals on

investment, climate change and

competition policy. Likewise,

governments were called on to ratifyand implement the United Nations

Convention Against Corruption to

remove a major constraint on free

trade that costs more than 5% of global

GDP (US$ 2.6 trillion) each year.

Second, rebuild critical infrastructure.

An estimated US$ 2 trillion investment

is needed each year over the next two

decades to improve water, road, ports

and air traffic control systems aroundthe world. Participants explored new

financing mechanisms, new technologies

and low-carbon infrastructure models.

The International Monetary Funds plans

for a US$ 100 billion Green Fund to

promote low-carbon economic growth are

also seen as an opportunity to create jobs.

Third, redesign education. Individuals

need to be prepared for multiple career

changes as well as the creation of entirely

new industries. Problem solving and

learnability are the two most relevant

skills for the future. Apprentice programmes

and vocational training need an overhaul.

In the developing world, governmentsshould offer educational incentives to

capture the girl effect that a girls

earnings rise by 20% with every year of

schooling, and she is more likely than

a boy to reinvest that money in her family.

In the same way that 2009 saw the

exit from the global crisis, the hope is

that 2010 will mark the exit from long-

standing global imbalances. There is a

unique window of opportunity to

rebalance globalization, rebuild

sustainable economies and invest in

job creation and social welfare.

Leaders were called on to heed the

lessons from saving the financialsystem: the urgent need for effective

and coordinated global action. Ring

fencing is no longer an option.

What we're seeing in the United

States, and perhaps in some other

places, is a statistical recovery and

a human recession.

Lawrence H. Summers, Director,

National Economic Council (NEC), Executive

Office of the President, USA

Rethinkin Davos

Gender inequality's effect on GDP growth

More female participation in schooling or the labour forcecould generate economic growth

Source: Economic and Social Survey of Asia and the Pacific 2007, UN Economic and Social Commission for Asia and the Pacific

EstimatedchangeinGDPgrowthrate,

developingAsia(percentagepoints)

0.2%

0.1

0.0

1% increase in femalesecondary school enrolment10% increase in femalelabour force participation rate*

* GDP-weighted average of seven panel countries in developing Asia

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Concern over the values drivingeconomic growth came to the fore

as some 34 million people lost their

jobs in the last three years and the

worlds strongest economies faced the

most severe recession in 70 years.

Driving the concern were the headlines

about banking sector bonuses and

massive government bailout packages

to mismanaged companies that were

too big to fail. Such contradictions to

the moral spirit of capitalism have erodedpublic trust in the private sector and

threaten the nascent recovery with amore debilitating and intractable crisis

of confidence.

The consensus in Davos was

that trust is the bedrock of the

market economy and to restore it,

government, industry and civil society

leaders must build common values

into the recovery. Stakeholders must

enhance corporate transparency and

promote ethical leadership; addressglobal environmental and social

concerns; and harness science toexplain and grow common values.

Towards values-based

corporations

Debates over government intervention

have dominated headlines for the past

18 months, yet policing hinders trust, and

bailouts alone will not build a sustainable

recovery. Corporate executives areconsidered by the public to be the

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least credible spokespeople for their

companies (Edelman Trust Barometer

2009) to reverse this trend, CEOs

must lead by example and make their

businesses transparent and socially

responsible. Various session discussions

underscored that incentives must

encourage success, but with the pay

gap widening between the shop floorand the boardroom, corporate bonuses

have become an obstacle to confidence

in the private sector. Compensation

packages of chief executive officers

must be fair, logical and transparent,

and should be based not only on

profit-making, but also on corporate

citizenship. With top multinational

corporations wielding more economic

clout than most sovereign nations,

businesss role in society extends farbeyond creating jobs and wealth.

Gender inequality, another common

challenge, remains a glaring reality

even in the worlds most developed

economies and was at the top of the

agenda in Davos. In the United States,

women now comprise one-half of

all college graduates, but corporate

leadership is still a male-dominated

field; in the United Kingdom, women

earn 22% less than men. Breaking the

glass ceiling is not just about equity, it

is about good business. At least one-

half of all customers in most businesses

are women, and corporate leadership

that reflects the composition of the

general public will have an easier time

connecting with clients. Corporate

structures that encourage a work-life

balance are critical not only to achievinggender parity, but to fostering a healthier

and more productive workforce.

Addressing global concerns

To ensure long-term recovery,

corporations must partner with

governments and civil society actors

to formulate sustainable solutions to

pressing human challenges.Neglecting global concerns like

extreme poverty and gender inequality

will set the stage for political backlash

if fundamental economic goals are

perceived as divorced from basic

human values. In short, the basic

question of why economic wealth is

accumulated must be answered by

demonstrating its power to improve

the living conditions of the less fortunate

when we consider that over 1 billion

people survive on less than US$1 per

day; every year millions of children die

of preventable diseases; and global

food demand will double by 2050.

Rebuilding Haiti after it was devastated

by the earthquake of 12 January is an

example where government, industry

and civil society can focus their energy

and expertise for the betterment of

humankind. In a special session of theAnnual Meeting, former US President

and current UN Special Envoy to Haiti,

William J. Clinton made a strong call

for immediate aid and sustained

investment to assist Haiti as it struggles

to rebuild from the rubble of the

devastating earthquake. Garnering

support from the international business

community to provide humanitarian

and technical assistance was an

immediate priority in Davos, but thelonger term goal remains increasing

Board effectiveness survey

37% of directors believe their boards were ineffectivein responding to the economic crisis

Note: Survey included 186 directors; 60% from North America or Western Europe

Operational spending

Capital spending

0 10 20 30 40 70%50 60

Percentage of directors who say the boardhas been ineffective at addressing the area

Developing new strategies tomanage risk, take advantage

of new opportunities

Talent management

Restructuring/divestment

Workforce size

Financing needs

M&A

Source: Data excerpted from Exhibit 3 in Andrew Campbell and Stuart Sinclair, "The crisis: Mobilizing boards for change," mckinseyquarterly.com

(February 2009)

Do you think your board's responseto the global economic turmoil hasbeen effective?

Yes

No

Dont know

We are not asking ourselves

what we will replace capitalism

with, but what kind of capitalism

we want.

Nicolas Sarkozy, President of France

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The nature of capitalism is going

to change, whether it be

Capitalism 2.0 or 3.0 The focus

has to be on the stakeholder, not

the shareholder and we have to

marry performance and purpose.

Indra Nooyi, Chairman and Chief

Executive Officer, PepsiCo; Member of the

Foundation Board of the World Economic

Forum

Source: Edelman Trust Barometer 2009 (January 2009)

Trust in CEOs

Fewer than one in five people in the US, UK, France andGermany find CEOs to be credible sources of information

Note: Survey of "opinion elites" age 35-64

2003 2004 2005 2006 2007 20092008

60%

50

40

30

20

10

0

Percentageofrespond

entswho

feelinformationfroma

CEOab

outacompanyis

extremelycredibleorv

erycredible

UK/France/Germany

US

China

Brazil

Japan

Trust in business

Trust in business fell late in 2008 in the US and France,but has since rebounded

Source: Edelman Trust Barometer, Mid-year Report (August 2009)

80%

70

60

50

40

30

20

10

0

Publictrustinbu

siness

todowhatisright

US UK France

Note: Survey of "opinion elites" age 35-64; includes age 25-34 in June 2009

Germany India China

Jan08

Jan09

Jun09

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private sector involvement to rebuild

Haitis economy and to improve the

conditions for job growth. The need to

integrate the private sector to bridge the

gap between humanitarian assistance

and economic development led to the

creation of a Haiti partnership between

the Clinton Global Initiative, the United

Nations and the World Economic Forum.

Harnessing knowledge to

understand and promote

values

If properly harnessed, the natural and

social sciences can help advance

common values which was an emergent

theme at the Annual Meeting. Physical

science has discovered hard evidence ofour common humanity: brain researchers

are beginning to understand the neural

bases of empathy and have already

determined that we are all basically

rational and, therefore, capable of

working through our differences.

Technology has dramatically changed

the way we interact, particularly for

those born in the last 30 years. Social

network users are one-third less likely

to know their neighbours; mobile

phone users have a 12% larger circle

of close friends than do non-users.

The social sciences, too, must evolve

to better reflect our values which were

also underscored in Davos. Neoclassical

economics, focused narrowly on wealth

creation, no longer fully describes the

rationale behind well-functioning

capitalism; and neoclassical economicmodels, built as they are on rational

actors, have provided less and less

accurate predictors. In particular, the

current financial crisis has cast new

doubt on Milton Friedmans famous

theory that managers should exclusively

seek to maximize shareholder profit.

Instead, executives must take a broad

view of stakeholder interest to encompass

energy conservation, social justice and

prudent economic principles.

At the 40thAnnual Meeting, leaders

revisited the notion that capitalism, as

originally conceived by the 18th century

Scottish philosopher Adam Smith, was

based on the value of our common

humanity. The conclusion was that

today, economic recovery will not

happen unless it is shaped by a moral

recovery.

Public trust by industry

Technology is the most trusted business sector

Source: Edelman Trust Barometer 2009 (January 2009)

Publictrustinthe

sector

todowhatisright

Note: Survey of "opinion elites" age 35-64

80%

60

40

20

0

Technology

Biotech/

lifesciences

Healthcare

Automotive

CPG

manufacturers

Energy

Retail

Food

Pharma

Entertainment

Banks

Media

Insurance

Are transient shareholders,

speculators and game players

really the legitimate owners of

publicly traded companies? In all

decent societies, tourists don't vote,

and gamblers don't own the

casino.

Yvan Allaire, Chair of the Board of

Directors, Institute for Governance of Public

and Private Organizations (IGOPP)

Rethinkin Davos

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Fast, coordinated action by the global

financial community successfully

prevented last years global recession

from turning into a worldwide depression.With much of the world now rebounding,

we are facing a new economic landscape.

A key question is how to return to normal

when nearly everything has changed.

How can the global community

re-establish sustainability?

Extraordinary efforts in an emergency

can provide temporary solutions, but if

left in place too long, they risk creating

their own potentially lethal problems.

The threat of destructive inflation from

the stimulus packages that helped

hold off financial collapse is an example.

Leaders in Davos made it clear thattrue sustainability requires new thinking

and a new approach to globalization.

The population explosion

The population bomb is at the root of

many of todays problems. It took

50,000 years for the world's

population to reach 1 billion. Between

now and 2050, population will rise by

3 billion to reach 9 billion people on

earth a 50% increase in less than 50

years.

While the populations of some wealthier

countries are declining, many of the

poorest countries are experiencing

bursts of population increases. For

example, Rwanda has an annual

birth rate of 5.5% compared to the

global average of 2.3%. The world is

experiencing population spikes that

strike countries that are least able to

cope. One solution is educating and

empowering women to take control

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of their lives and family size.

Changing cultural attitudes is also

important and was highlighted in

related discussions.

In many of the poorest countries, the

population is extremely young, requiring

added investment in education, training

and employment. Many people areliving longer thanks to improved health

and nutrition, thereby stretching social

safety nets. The systems for dealing

with retirement and health benefits, as

well as attitudes towards the aged,

must be adapted to these changes.

Climate change, low-carbonenergy, transportation and

construction

The Copenhagen Conference may

have disappointed some, but it also

marked a turning point. The reality of

the threat from climate change is now

almost universally accepted, although

there is considerable disagreement on

how to solve it. Europe wants an

international agreement with fixed

limits for carbon emissions that can be

verified by an international body. The

US and a number of emerging

markets want a political commitment

relying on the authority of each

country's national legislation to limit

emissions. These differences will need

to be resolved in Mexico which will

host the successor conference on

climate change after Denmark in 2010.

The emerging markets argue for

reducing the growth rate of their carbon

emissions rather than absolute limits,which will turn back the development

clock. The consensus is that it will take

at least 30 years to make a transition

to non-carbon-based energy. In the

meantime, fossil fuels will continue to

provide 70-80% of energy requirements.

Current oil consumption is around

86 million barrels a day and accounts

for roughly 40% of the worlds carbon

emissions. However, approximately

44% of the investment in low-carbonenergy from 2000-2008 came from

US oil and gas companies.

At least US$ 500 billion a year is needed

to make the transition to a low-carbon

economy. Current investments are

one-third of that, roughly US$ 150 billion

a year. A recommendation is to use

available public money to leverage

private investment. By one estimate,

US$ 5 billion in public funds could

leverage US$ 45 billion in private

investment.

Source: The Business of Sustainability, MIT Sloan Management Review (2009)

Business case for sustainability survey

Has your company developeda "business case" or

"proven value proposition"for addressing sustainability?

Which internal challengespresent the most significantroadblocks to addressing

sustainability issues?

Only 31% of companies have developed a business casefor addressing sustainability

25%

20

15

10

5

0

Outmodedperspectives

onsustainability

Too manycompetingpriorities

Don't knowmost

effectiveways to

take action

Inabilityto assesstrade-offsbetweenlong and

short term

Incentivesstalled byrecession

Notenough

resources

Notpursuadedof business

case

Note: Survey of 1,560 business leaders worldwide

Yes

No

Have tried but too difficult to developUnsure

'

31%

43%

7%

19%

The world is sick, and we need to

fix it. It is the same in a family.

You have some members of the

family sick, and you need to bring

him or her to the doctor, and pay

the costs. And we need to pay the

costs in order to fix the world.

Felipe Caldern, President of Mexico

8/7/2019 AM_2010_Report


A glaring omission at the Kyoto and

Copenhagen conferences is the problem

of transportation, which accounts for

nearly 50% of total carbon emissions.

The construction sector has also been

relatively ignored. Buildings account

for 40% of energy use and 70% of

carbon emissions in urban areas. Major

reductions are possible through advanced

engineering and new materials.

While many industrial countries favour

the idea of carbon trading and carbon

offsets as a stopgap measure during

the transition away from fossil fuels,

some emerging markets caution that

carbon offsets should not become a

pretext for continuing to pollute rather

than engaging in real conservation.

Their argument is that alternative

energy will not be viable as long as

there are less expensive alternatives.

The nuclear energy option looks

increasingly attractive. Nuclear power

provides 21% of the electricity in OECD

countries, and 14% worldwide.

Real sustainability, however, depends

on a frank assessment of the full

lifecycle of any project or process.

Relating to nuclear power, this means

factoring in the costs of construction,

storing radioactive waste anddismantling outdated plants, and

disposing of radioactive debris.

Biodiversity, forestsand oceans

The decline in biodiversity which is

closely linked to climate change is

a serious threat. The rainforests hold

one-fourth of the earth's carbon andabsorb 15% of annual atmospheric

carbon emissions. Despite their obvious

We are saying that those who

are responsible for the emissions

should also be responsible for the

cleaning of the global

environment.

Jakaya M. Kikwete, President ofTanzania

Source: New Energy Finance (2009)

Clean energy investment requirements

Investments in clean energy will need to doublein the next five years to stabilize emissions

$600

500

400

300

200

100

0

Cleanenergyinvestments(U

S$,

billions)

2005

$59

$93

$148 $155

$264

$373

$502

$548

$590

2006 2007 2008 2010 2015 2020 2025 2030

Annual investments required toachieve "2020 Peak Scenario",stabilizing emissions by 2019

Source: WWF; UNEP-WCMC (2004)

The Living Planet Index, 1970-2000

There are 40% fewer species todaythan there were 30 years ago

120

100

80

60

40

20

Population

index

(100=1970)

1975 1980 19901985 20001995

All vertebrate species (Living Planet Index)

1970

Note: The Living Planet index measures trends in populations of vertebrate species

ver e ra e s ec es v n ane n ex

Terrestrial species

Freshwater species

Marine speciesTerrestrial species

Freshwater species

Marine species

8/7/2019 AM_2010_Report


importance, at least 12.5 million

hectares an area roughly the size

of Greece continue to be sacrificed

yearly. At the same time, deforestation

is responsible for 20% of all CO2

emissions.

Up to 70% of the worlds species face

extinction, including one out of eightspecies of birds and one out of four

mammals. Three-fourths of the genetic

diversity in agriculture has been lost and

75% of the worlds fisheries are over-

exploited. The collapse of bee colonies

has cost US farmers US$ 15 billion

and threatens the pollination of a wide

variety of fruit trees.

Participants strongly recommended that

all future projects factor in the impact onbiodiversity with a view to preventing

more damage.

Changing culture

Even without the financial crisis of

2008 and the global recession of

2009, current trends are clearly

unsustainable. Growth for the sake of

growth is not sustainable for markets

or for the planet. Equilibrium must be

established with the planets capacity

to renew itself.

A key element in rethinking carbon

emissions, as with many of the other

problems discussed, is to take

account of the full lifecycle costs of

each project and each process. This

requires a higher degree of awareness,a more comprehensive vision and

greater frankness. A profound change

in our attitudes and behaviour is

needed. The message that emerged

from the World Economic Forum

Annual Meeting 2010 is that if life

on the planet is to remain sustainable,

future generations can no longer

be expected to pay for the lack of

foresight today.

Therefore, driving growth through

sustainability is fundamental for global,

national and business competitiveness

in the 21st century. The Annual Meeting

of the New Champions 2010 (Summer

Davos) will focus on the theme Driving

Growth through Sustainability. Taking

place on 13-15 September in Tianjin,

Peoples Republic of China, the

programme will focus on how to

increase energy efficiency, lower carbon

emissions, develop green technology

and rebuild basic infrastructure. It will

also provide a systemic overview of key

economic, industry and technologicaldevelopments that will reshape business

and society for the foreseeable future.

Source: Millennium Ecosystem Assessment

Extent of dryland systems

Dryland systems cover 41% of the world's land massand are home to 2 billion people

Polar SystemsHigh-latitude areas frozenfor most of the year

Dryland SystemsLands where plantproductivity is limited bywater availability

Urban SystemsBuilt environments withhigh human density

8/7/2019 AM_2010_Report


Improvethe Stateof theWorld:Rethink,Redesign,

Rebuild

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The world is characterized by adisconnect between the nature of global

risks fast-moving, interconnected,

cross-issue, cross-border and the

capacity to manage them slow-

moving, fragmented, narrowly focused.

Many global risks are variations on

an older theme: piracy, pandemics

and financial risk have been threats

to human welfare for centuries.

But their speed of transmission

and potential impact has been

enhanced by the interconnectedness

of globalization. Managing these risksis a global imperative if globalization is

to survive.

In addition to questions of management,

there are questions of ownership:

who should be responsible for the

global commons the oceans, the

environment and to what extent?

Without a sense of collective

ownership over the global commons,

the world may face an era of

disastrous irresponsibility.

Mitigating systemic global risks is asmuch about overcoming the short-

term and narrow biases deep in

human psychology and structures, as

it is about new technologies or new

institutions.

In many cases, such as managing the

global water crisis, solutions exist but

implementation is lacking. In other

cases, such as managing pandemics,

the institutional frameworks are there

but have not yet been tested by the

Mitigating Global Risks andAddressing Systemic Failures

8/7/2019 AM_2010_Report


most dangerous combinations of

morbidity and ease of transmission.

So far, the world has been lucky.

The response to the global financial crisis

provides some grounds for optimism.

Faced with a clear and present danger

of financial meltdown, a combination

of leadership, creative thinking andradical measures headed off catastrophic

failure. But what steps can be taken

to avert crisis before it happens? Can

the same urgency be created for non-

financial risks: pandemics, climate

change, energy security and food

security? Will the financial crisis and

the emergence of new governance

mechanisms provide momentum for

dealing with other systemic failures,

or will short-term economic issuescrowd out long-term global risks, even

ones with potentially far more serious

consequences for global well-being?

As one participant put it: Nature

wont wait for humans to come up

with the answer.

Six key messages emerged from the

Annual Meeting in Davos on how to

think systemically about how to solve

the global challenges ahead.

Recognizeinterconnectedness

Global risks are interconnected so

must be the measures taken to manage

them. Achieving energy security will be

meaningless if it hastens a climate

catastrophe. Policies that may helpboost energy supply but put additional

stress on water and land resources

may swap one global risk for another.

Dealing with interconnectedness means

avoiding unintended consequences

and negative feedback loops. It also

means identifying interconnected

mitigation opportunities. For example,

low-cost investments in drip-fed

agriculture techniques may help mitigate

water scarcity while reducing energy

demand. Mitigating climate change will

vastly reduce the scale of the risks to

food and water security.

Share information,share assessments

Accurate, timely information is importantwhether the challenge is managing the

spread of a pandemic or ensuring the

board of a company is sufficiently

informed of its risk exposure. Incomplete

or incorrect information can be costly.

Far greater investment in information

systems, early warning and foresight is

needed to equip the world to anticipate,

avert and manage systemic failures.

Common assessments and a commonoperating language for global risks are

prerequisites for managing them.

The UN Intergovernmental Panel on

Climate Change has brought a common

scientific assessment of climate change

to policy discussions. Could a similar

global audit of scarce resources help

drive better common assessments of

the urgency of water and food scarcity?

Could more popular science on the

decline of global fisheries finally mobilize

Source: United Nations (2008)

Global population growth

Population is forecast to rise by 2.2 billion people by 2050

Globalpopulation*

10

9

8

7

6

5

4

3

2

1

0

1950 1960 1970 1980 1990 2000 2010 2020 2030

Forecast

2040 2050

* Forecasts are medium variant

2050 population: 9.1 billion

2009 population: 6.9 billion

8/7/2019 AM_2010_Report


public action to safeguard the food

source on which one-fifth of the world

depends?

Empower technology

Participants heard about new

technologies that could help address

global risks, such as the development

of proliferation-proof nuclear reactors

using alternative feedstock. They also

heard about the potential for far wider

application of older technologies, such

as low-till or no-till agriculture. But

over-reliance on single-shot technological

solutions is dangerous, whether achieving

energy security through nuclear power

or mitigating climate change through

geo-engineering. Some technologies

are unproven; others are not sufficiently

scaleable. Overemphasis on technology

tends to be linked to an under emphasis

on other more immediate mitigation

measures, such as conservation and

efficiency.

Technology can be empowering as

a tool in managing global risks, but its

usefulness needs to be qualified. New

technologies can also create new

vulnerabilities, such as cyber threats,

to which the world is only just waking

up, or the threats from biological

engineering.

Get the incentives right

Top-down policy measures can be

helpful in managing some global

risks, but setting the right frameworks

of incentives can be far more powerful,

thereby unleashing the power of

markets, tapping into the wisdom

of crowds and releasing private

finance.

It is not only the Great Recession, I

think it is a bundle of crises, not

one crisis, in the same period. The

food crisis, the financial crisis, the

global warming crisis.... All of

these crises have emerged from the

misinterpretation of human beings

in the conceptual framework that

we have built around us.

Muhammad Yunus, Managing Director,Grameen Bank

Rethinkin Davos

We really do need to ensure that

we never again get into the

position that the financial world

put the real economy into in 2007,

2008, and 2009.

Stephen Green, Chairman, HSBCHoldings

Source: NASA (April 2009)

Space debris

Earth orbits are more crowded after recent satellite

destructions and collisions

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

NumberofobjectsinEa

rthorbit

1960

1970

1980

1990

2000

2010 0 0

Rocket bodies

* Includes objects and refuse released from spacecraft

Mission-related debris*

Total objects

Fragmentation debris

Spacecraft

8/7/2019 AM_2010_Report


The first law of incentive structure should

be do no harm, but the opposite is

often the case. For example, the failure

to price water, deeply embedded in

current models of local economies and

of global trade, actively encourages

the waste of water, and fails to provide

an incentive to conserve and recycle.

Redesign global governance

The demand for better global governance

has never been greater. But achieving

more effective governance might mean

changing the basis on which we measure

legitimacy. Several participants noted

that the negotiation by consensus

mechanism is not working. Instead,

there may be a need for more action-oriented groups of countries taking the

lead on specific global risks, which would

provide momentum for wider action.

Managing global risks requires flexible

geometry in place of hierarchy, engaging

collaboratively across stakeholder groups.

Match global solutionswith local implementation

For some global risks, the immediate

solutions to the problem are local. For

example, in the case of water scarcity,

the solutions lie mainly in individual

watersheds. For other global risks,

while global action may be necessary,

implementation locally is important.

Without efficient local health systems,

managing global pandemics will be

difficult. Without local transparency, thetrust necessary for global agreements on

carbon will be absent. Without effective

local administrations, managing illicit

trade will be impossible.

Source: FAOStat (2009); UN Population Division (2006); PricewaterhouseCoopers analysis

Global harvest yields

Crop yields are rising, but not as fast as the global population

220

200

180

160

140

120

100

80

Index

(100=19

61)

Global harvest yields*

1961

* Index of global yields from 13 key agricultural crops

1966 1971 1976 1981 1986 1991 1996 2001 2006

Global harvest yields*

Global population

Source: Millennium Ecosystem Assessment

Extent of dryland systems

Dryland systems cover 41% of the world's land massand are home to 2 billion people

Polar SystemsHigh-latitude areas frozenfor most of the year

Dryland SystemsLands where plantproductivity is limited bywater availability

Urban SystemsBuilt environments withhigh human density

8/7/2019 AM_2010_Report


Much of the security debate at the

Annual Meeting 2010 was shaped by

events in two fragile states: Afghanistan

and Haiti. Although traditional securityissues continue to dominate many of

the worlds current conflicts, the two

cases show that national governments

and the international community are

increasingly facing myriad non-traditional

security challenges that can pose

serious threats to global stability and

development. The roster of threats is

growing, expanding from humanitarian

crises to energy security to cyber attacks.

Yet many countries facing 21st century

security threats continue to follow

20th century security paradigms.

In rethinking global security, the aim

should be to find new solutions based

on cooperation and inclusivity.

Political settlementor zero sum game

Although ensuring security in Afghanistan

remains a priority, there is growing

realization that a comprehensive political

settlement, and not just force, will help

the country emerge from years of war

and civil strife. This was one of the

major outcomes of the January 2010

London Conference on Afghanistan

that took place during the Annual

Meeting 2010 in Davos.

Officials who attended the conference

and then participated in the Annual

Meeting to report their findings were

encouraged by a plan to end the conflict

in the country through development,

good governance and democratic

processes, including talks with the

Taliban. The most important element

of the roadmap is that the military and

civilian efforts be Afghan-driven, with

a supporting role for the international

community. This is a high-risk strategy

Enhancing Security

8/7/2019 AM_2010_Report


given the uncertainty of all stakeholders

buying into the plan, but it is a strategy

with potentially high rewards peace

and reconciliation.

Although not featuring as high on the

international agenda in recent years as

climate change, food security, global

health and nuclear proliferation, there

are other high-risk issues that continue

to pose real threats. With an estimated

existing 23,000 nuclear warheads, the

world cannot be complacent about

the scale of risk, especially with the

contentious, unresolved nuclear

programmes of Iran and North Korea.

State actors, international institutions

and technology innovators shouldengage in developing effective strategies

to contain nuclear threats. Ongoing

US-Russia arms reduction talks,

a review conference to strengthen

the Nuclear Non-Proliferation Treaty

and a US-sponsored nuclear summit

scheduled for later this year to enhance

international cooperation and expand

the peaceful use of nuclear energy

worldwide are signs that 2010 could

be a year to start working towards a

world without atomic weapons.

Preparing for the next disaster

Just as New York has become the

symbol for the international campaign

against terrorism after 9/11, Haiti could

be the ground zero in the international

campaign against poverty, disease

and despair.

Following the catastrophic earthquake

in Haiti that has claimed tens of

thousands of lives and destroyed

much of Port-au-Prince, humanitarian

and development agencies continue

to deliver much needed aid and are

starting to plan rebuilding efforts. Better

cooperation and coordination among

governments, intergovernmental agencies

and NGOs are needed to ensure securityand prepare for future natural disasters.

These efforts should include the private

sector, particularly multinationals, which

can bring unique value to developing

countries and fragile states like Haiti.

Through investment, companies can

bring much-needed revenue streams

to the state, create jobs and revive

local supply chains, which in turn can

boost public services such as health

and education.

Source: Bulletin of Atomic Scientists (2009); Carnegie Endowment (2009); press reports

Global stockpile of nuclear weapons

NPT states still possess over 20,000 nuclear warheads

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0Numberofnuclearwarheads,

NPTsignatories*

1945 1950 1960 19651955 19801970 1975 19901985 20001995 2005

* Israel, India, Pakistan and North Korea could possess an estimated 200-300 additional warheads.

NPT states are signatories to the Nuclear Non-Proliferation Treaty.

Partial Test BanTreaty signed

NuclearNon-ProliferationTreaty signed

Intermediate-RangeNuclear Forces

Treaty signed

ComprehensiveTest Ban

Treatyadopted

by UN

France andChina

conductlast tests

by NPTsignatories

N. Koreastages tests

Indiaand Pakistanstage lasttests

I think you need to know, in my

opinion, given what they went

through, the people of [Haiti]

behaved magnificently in the

aftermath of the most

unimaginable tragedy.

William J. Clinton, Founder, William J.

Clinton Foundation; President of the United

States (1993-2001); UN Special Envoy to

Haiti

8/7/2019 AM_2010_Report


A comprehensive risk management

framework that involves business

working together with international

organizations, governments and local

communities in emergency response

and reconstruction measures is the

model to follow in Haiti and elsewhere

in the face of humanitarian challenges

and increasing natural disastersexpected in the years to come.

Working towardsa sustainable energy future

Climate change is predicted to have

a significant impact on the frequency

and intensity of natural disasters, such

as floods, droughts and hurricanes.

However, climate change is not only

a challenge, but also an opportunity.A paradigm shift to reduce greenhouse

gas emissions and move from a global

economy dominated by hydrocarbons

has the potential to drive forward the

next wave of technological innovation,

while at the same time to ensure

energy security.

The energy sector is the largest source

of emissions globally. At a rate of about

85 million barrels a day, oil consumption

is responsible for 40% of the worlds

CO2 emissions. The best way to reduce

demand is through the greater use of

renewable energy sources and increased

fuel efficiency.

While the Copenhagen Conference

did not produce a new climate deal,

many countries did commit to emission

reduction targets, indicating that it is

possible to pursue a low-carbon

economy. But this is not a task for

governments alone. As the key delivery

agent of low-carbon investment,

innovation, products and services,

business needs to have a voice. And,

with energy requirements set to

increase, especially in developing

countries, it will be increasingly

important to share technologies and

expand global partnerships.Cooperation and governance are

important elements in finding solutions

to energy security problems.

Securing cyberspace

International cooperation is also needed

to investigate cyber crimes and identify

the perpetrators. More than 2 million

viruses, worms and Trojans have

emerged over the past few years. The

Source: Information from the Stockholm International Peace Research Institute (SIPRI), http://www.sipri.org/

Worldwide military expenditures

Defence spending trending higher over the past decade

$1,300

1,200

1,100

1,000

900

800

Worldmilitaryexpenditures

(US$,constant2005pricesandexchangerate

s)

1993 1998 200820031988

Failing states

Thirty-eight countries make the Fund for Peacesfailed states Alert list

Source: Fund for Peace (2009)

Note: The Failed States Index rates nations on 12 social, economic, political, andmilitary indicators to determine their state vulnerability to collapse or conflict.

Failed States Index 2009

Alert

Warning

8/7/2019 AM_2010_Report


The best policy for development is

the fight against poverty. It is also

one of the best recipes for peace.

Celso Amorim, Minister of Foreign

Relations of Brazil

threats are constantly growing and

becoming more sophisticated, and are

being used as a weapon targeting

home users, businesses, financial

markets and governments.

In addition to criminal activity, companies

and countries alike are also behind

todays cyber attacks in the form ofindustrial and military espionage. At

what stage does a cyber attack

constitute an act of war? How does

a nation or corporation retaliate?

Security for a new century

Traditional security concepts often

bring about insecurity, especially as

policies are too often based on howto manage rather than solve a crisis.

Rethinking security in the 21st century

requires consolidating the shift from

state to human security, moving

towards cooperative security. There is

also a need to strengthen and evolve

institutions to manage global change.

This new global vision cannot be

confined to state actors, but to be

successful must include non-state

actors such as NGOs, corporations

and individuals. To this end, the World

Economic Forum will convene relevantpolicy-makers and experts from its

Global Agenda Councils for a Global

Redesign Summit on 30-31 May in

Doha, Qatar. The aim will be to convene

experts from governments, international

organizations, universities and think

tanks to examine gaps in international

cooperation and develop proposals to

overcome these shortcomings.

I know that there's been this

concern that the dollar shouldn't be

the standard currency in the world.

Well, the Pentagon shouldn't be thefallback military for the world.

Barney Frank, US Congressman from

Massachusetts (Democrat), 4th District,

Chairman, Financial Services Committee

Rethinkin Davos

Malicious code threats

Over two million viruses, worms, back doors or Trojanshave emerged over the past two years

Source: Symantec (April 2009)

1,750

1,500

1,250

1,000

750

500

250

0Numberofnew

maliciouscodethreats*(th

ousands)

2002 2003 2004

* includes viruses, worms, back doors and trojans

2005 2006 20082007

8/7/2019 AM_2010_Report


Global governance institutions have been

hit by a perfect storm that has lasted

for two years. The storm started with

skyrocketing oil prices, increasing foodscarcity and hunger, and accelerating

climate change; it culminated in a global

financial crisis of epic proportions. For

leaders at the Annual Meeting 2010 in

Davos these cataclysmic events exposed

a harsh truth: our interconnected world has

become so complex that new rules are

needed for the governance of globalization.

Battered, but having survived, policy-

makers together with citizens need

to rethink 20th century institutions and

redesign them to meet 21st century

demands. In redesigning mechanisms

of global governance, the international

community has been urged to adapt newmodels of cooperation, moving away

from procedures that require unanimity.

An institutional reboot is needed.

The financial crisis, apparently in

remission thanks to short-term life

support measures, has pushed policy-

makers to a critical crossroad. Their

immediate challenge is to redesign

financial regulation. Their medium-term

challenge is twofold. First, they must

move away from one-size-must-fit-all

arrangements to pluralist solutions,

public-private partnerships and smaller

scale initiatives driven by regions or

cities. Second, such variable geometrysolutions must comply with overarching

regulatory frameworks that facilitate

international cooperation and

multilateralism.

Global cooperation is essential to

address the most pressing transnational

challenges of our time, including peace

and security, poverty, development,

human rights and the environment.

The trick is balancing national, regional

and global interests, while designing

Building Effective Institutions

8/7/2019 AM_2010_Report


new instruments for a new era.

The fundamental ahead is rebuilding

public trust, restoring legitimacy and

creating a world that is value-driven

and more inclusive, where citizen

participation drives decision-making

processes.

Rebuilding the globalfinancial architecture

Participants grappled with myriad

challenges about the future of the global

economy, how to rethink old paradigms

and how to redesign or create new

business models. They agreed that

first and foremost, the risk of a systemic

failure must be minimized and the system

must be made more resilient. To avoidfuture meltdowns, an early warning system

is needed, driven by transparency,

accountability and better communication.

After Wall Streets so-called casino

binge the sun has set on the era of

self-regulation. Representatives of

financial institutions fretted over too

much regulation, while economists

and industry leaders warned that if

emerging economies follow the same

reform and regulatory measures as

developed countries, it will choke

growth. Regulated entities call for

consistency and predictability, as well

as for recognition that, while general

principles and global treatment may

prevail, a regulatory regime must be

flexible to accommodate national

differences.

Several participants called for an overhaulof capitalism to create a moral, more

cohesive capitalism and debated the

possibility of new metrics to replace

GDP to measure a societys economic

well-being. Others argued that reform

of the international monetary system

must be part of a larger process of

change.

Public anger over the bailout and out

of control CEO compensation is notgoing away. Working people paid for

the bailout and their representatives

trade unions and civil society must

be given a place at the table.

Rethinking democraticlegitimacy

The legitimacy of international institutions,

such as the United Nations, is

undermined by the veto power of a

few big nations. Critics view

Prospects for financial regulation

In the midst of the crisis, fewer than half of executivesbelieved financial regulations would be globally coordinated

Source: "Economic conditions snapshot, November 2008", McKinsey Quarterly

Ideal

Expected

Idealv.expectedfocusofnewf

inancialindustry

regulation(percentageofallresponde

nts)

75%

50

25

0Coordinatingregulations

globally

Regulatingnew products

Note: Results of a global survey conducted 5-10 Nov, 2008 (n=906)

Regulatingbasic operations

of financialinstitutions

There shouldbe no newregulation

of the financialindustry

Regulatingexisting troubled

products,such as CDS

We cannot go back to practices

before the crisis: that would be

going forward into the past.

Doris Leuthard, President of the Swiss

Confederation and Federal Councillor of

Economic Affairs

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institutions such as the World Bank

and the International Monetary Fund

as tools that rich countries use to

impose rules and policies on poor

countries. There were calls for a new,

or at least retooled, Bretton Woods

and a more inclusive G20.

As one participant noted, the G20 is

a nice organization if a country is

a member of the club, but not such

a nice organization for those left out,

which raises serious questions about

its legitimacy.

Global regulation-making has become

gridlocked and the void has been filled by

regional systems of law and a tendency

towards unilateralism. The failed 2009

Copenhagen Climate Conference and

the stalled Doha Development Round

demonstrate the inadequacies of

consensus-based processes for

complex global issues.

To meet urgent global challenges,

fundamental changes to decision-

making processes within international

institutions are needed. But any redesign

of the international legal system should

After what happened in 2008-

2009, I believe that we will move

to a more multipolar world.

Power, influence, wealth will be

more distributed throughout the

world. This is symbolized by, in a

sense, the G20.

Tony Tan Keng-Yam, Chairman,

Government of Singapore Investment

Corporation

Source: IMF (October 2009)

Forecast G7 government debt

G7 net government debt levels rising

Governmentnetdebt(percentageofGDP)

1989 2009F1999 20041994

120%

100

80

60

40

20

0

Germany

Japan

France

Italy

Forecast

Canada

US

UK

Participation in online member communities

Two-thirds of the global online population participatein social networks or blogs

Source: "Global Faces and Networked Places" (March 2009), Nielsen Online, Netview, Home and Work Data

Percentageofonlineuserswhoparticipate

in"membercommunities"*,December2008

* Member communities includes social networks and blogs. Japan not included in Global figure.

80%

60

40

20

0

Brazil

Spain

Italy

Japan U

K

Global

US

France

Australia

Germany

Switzerland

30 | World Economic Forum Annual Meeting 2010

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involve a wide range of stakeholders

to ensure that it is responsive to the

new needs of the 21st century. In

particular, the voices of developing

and emerging market countries must

be considered.

Scaling up successful models

Not everything is broken. It is important

to learn from those companies that

properly align the interests of share-

holders, stakeholders, legislators and

taxpayers. The World Trade Organization

is one of the rare international

organizations that work as intended.

However, if Doha collapses again, its

legitimacy will be irreparably eroded.

The Global Alliance for Vaccines andImmunisation (GAVI) is a success story.

Since its launch 10 years ago, GAVI

has saved more than 4 million lives and

has immunized an additional 256 million

children in the poorest countries. GAVIs

visionary public-private partnership

model leverages the skills of individuals

and organizations in a united mission.

GAVI has already inspired the Global

Fund to Fight AIDS, Tuberculosis and

Malaria, which has attracted significant

investment. The model is now being

replicated by a new public-private

partnership to tackle chronic diseases.

Leadership for tomorrow

The failure of heads of state to come

to an agreement in Copenhagen in

December 2009 underscored the

weakness of existing models and

confirmed what many people believe:

todays global and national leadership

is weak or missing. Young Global

Leaders a group of talented young

people selected by the World Economic

Forum meeting in Davos pointed

out that while a vast majority of them

want to serve in the public service,

they are dissuaded by fraud, excess

bureaucracy, lack of career options

and other obstacles.

One way to overcome the obstacles is

education. Institutions must do more to

inspire and train young people to serve.

Education shapes tomorrows leaders.

A public-private partnership is needed to

develop a new vision for the educational

sector that will inspire entrepreneurship

and meet the needs of the ever-changing

job market. An alliance similar to GAVI

could create the synergies needed.

Returns on investment for education, by gender

Investments in girls secondary schooling yield over18% total return to society

Source: Psacharopoulos and Patrinos, "Returns to investment in education: a further update", Education Economics (2004)

Returnoneducationalinvestment

20%

15

10

5

0

Secondary HigherPrimary

Men Women

World Economic Forum Annual Meeting 2010 | 31

In Kyoto, all the countries there

agreed on reducing emissions and

setting a target for 2050 . . . but no

one agreed on setting a target for2020. And I think the reason is

because of the participants none

will be around in 2050.

Lee Myung-Bak, President of the Republic

of Korea; Chair, 2010 G20 Summit

Rethinkin Davos

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The IdeasLab is a highly engaging session format designed

in collaboration with major universities and the Forum, where

powerful ideas, trends and concepts are presented by leading

intellectuals and entrepreneurs.

Following the Pecha Kucha style presentations, participants

chose a topic for further exploration and spent 20 minutes in

dialogue with the presenter. Each team shared the highlights

of their conversation with everyone in the IdeasLab.

Pecha Kucha presentations from the IdeasLabmay be viewed on YouTube. Go to www.

YouTube.com and search for Davos

2010 - IdeasLab.

8/7/2019 AM_2010_Report


8/7/2019 AM_2010_Report


Acknowledgements

ABB

Abraaj Capital

Accel Partners

Accenture

Adobe Systems Incorporated

Agility

Alcatel-Lucent

Alcoa

Apax Partners

ArcelorMittalAT&T

AUDI AG

Bahrain Economic Development Board

Bahrain Mumtalakat Holding Company

Bain & Company

Bank of America

Barclays PLC

Basic Element

Bill & Melinda Gates Foundation

Bombardier

Booz & Company

The Boston Consulting Group

BP

BT

CA Inc.

Citi

Chevron

Cisco

Clayton, Dubilier & Rice LLC

Clifford Chance

The Coca-Cola CompanyCredit Suisse

Deloitte

Deutsche Bank

Deutsche Post DHL

Dou Group

Dow

Dubai Holding

DuPont

Ernst & Young

Eskom

Etihad Airways

Fluor Corporation

GE/NBC Universal

Goldman Sachs

Google

Hanwha Group

HCL Technologies

Heidrick & Struggles

Hewlett-Packard Company

HSBC

Huawei TechnologiesHubert Burda Media

IHS Inc.

Infosys Technologies

Intel Corporation

Investor

JPMorgan Chase & Co.

KPMG

Kohlberg Kravis Roberts & Co.

Kudelski Group

Lenovo

Mahindra Satyam

Manpower

Marsh & McLennan Companies (MMC)

McKinsey & Company

Merck & Co. Inc.

METRO Group

Microsoft Corporation

Morgan Stanley

The NASDAQ OMX Group

National Bank of Kuwait

NestlNews Corporation

NIKE Inc.

Nomura Holdings

NYSE Euronext

The Olayan Group

Omnicom Group

PepsiCo

PricewaterhouseCoopers

Reliance Industries

Renault-Nissan

Saudi Basic Industries Corporation (SABIC)

Sberbank

Siemens

SK Group

The Standard Bank Group Limited

Standard Chartered Bank

Swiss International Air Lines

Swiss Re

System Capital Management

Thomson Reuters

Troika Dialog GroupUBS

Unilever

VimpelCom

Visa Inc.

Vision 3

Volkswagen AG

VTB Bank

WPP

Zurich Financial Services

The World Economic Forum would like to thank its Strategic Partners for their valuable support of the World Economic

Forum Annual Meeting 2010.

8/7/2019 AM_2010_Report


ContributorsAndr Schneider is Managing Director and Chief Operating Officer and W. Lee Howell is Managing Director, Head of

Programming and Global Agenda Councils. Nadine Bonard is Associate Director, Events.

William Dowell, Charles Emmerson, Mark Schulman, Gareth Shepherd, Dianna Rienstra and E. Benjamin Skinner were thereport writers. Dianna Rienstra was the editor of the report and worked with Nancy Tranchet, Associate Director, Editing and

the Annual Meeting Programme Team.

The Annual Meeting Programme is prepared by Mireille Bertolini; Sebastian Buckup; Antonio Calvosa; Nathalie Chalmers;

Johanna Dousse; Anne-Sophie Duprat; Jessica Dyllick; Natalie Hendro; Emma Loades; Begona Martinez; Stephanie

Nassenstein; Nicolas Ruble; Tiffany West; and Victor Willi.

Editing: Nancy Tranchet, Associate Director

Design and Layout: Kamal Kimaoui, Associate Director, Production and Design

Photographs by swiss image and Richard Kalvar/Magnum

Special thanks to PricewaterhouseCoopers for their help in preparing data and statistics underpinning this report.

The World Economic Forum would like to express its appreciation to the summary writers for their work at the Annual

Meeting 2010. Session summaries are available at www.weforum.org/annualmeeting/summaries2010

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The World Economic Forum is an independentinternational organization committed to improvingthe state of the world by engaging leaders inpartnerships to shape global, regional andindustry agendas.

Incorporated as a foundation in 1971, and basedin Geneva, Switzerland, the World EconomicForum is impartial and not-for-profit; it is tied tono political, partisan or national interests.(www.weforum.org)

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