The verdict: It’s complicated. But signs of a shifting world order and trepidation about exactly where things will land permeated the five-day conference and its many champagne-filled soirees.
“There is a real angst about globalization this year,” said Jason Furman, an economist at Harvard University and former Obama adviser. “I mean, there’s always angst about globalization, but the big question this year is: How do you get out of any of this stuff? What’s the endgame of the China lockdowns? Or Russia’s invasion of Ukraine? When will inflation go away? There are no obvious off-ramps for any of these problems.”
Ukraine war brings an unusual moral edge to Davos
The antithesis to global unity — the war in Ukraine — took center stage even as the Davos crowd pontificated on longer-term issues like climate change, sustainability and the importance of education. In a virtual address, Ukrainian President Volodymyr Zelensky called for “maximum” sanctions against Russia and urged foreign companies to move operations to Ukraine instead.
“Davos is in Europe, and Europe is at war,” said Ian Bremmer, founder of the Eurasia Group and longtime conference attendee. “That’s made Davos very relevant this year. It’s immediate, it’s right now: We need to end this war.”
At the same time, he and others said, the World Economic Forum is grappling with a much larger identity crisis: What does it mean to represent global interdependence of trade and investment at a moment when countries have built up new walls and are renegotiating their alliances?
Russian diplomats and oligarchs, who have long had a towering presence in Davos, were forbidden from attending this year. Instead, the longtime “Russia House,” known for its free-flowing vodka and caviar, was turned into a “Russian War Crimes House” filled with images and videos of war atrocities.
Meanwhile, China — the world’s second-largest economy — was also largely absent at the forum because of sweeping shutdowns and travel restrictions related to its “zero covid” policy. After years of brisk growth, its economy is showing troublesome signs of slowing. And businesses are talking about moving operations out of China to other countries, including Vietnam, India and Mexico.
“After the remarkable events of the last two years, the focus now is on re-shoring, near-shoring, trying to make sure you have sources of supply all around the world,” said Paul Knopp, chief executive of accounting and consulting firm KPMG. “The global pandemic — which I don’t think many of us saw coming — has provided some real lessons on supply chain shocks.”
In shadow of war, there’s no ‘business as usual’ in Davos
The rethinking of globalization comes amid a larger backlash against the global elite — and the wealthy in particular, who have seen their fortunes skyrocket during the pandemic, even as millions around the world have fallen into poverty. Some 657 million people now live in extreme poverty, up from 641 million two years ago, according to projections from the World Bank.
“A lot of people are fed up,” said Bremmer, author of “Us vs. Them: The Failure of Globalization.” “You see it with illiberal trends, the rise of China, Bolsonaro in Brazil, Duterte in the Philippines, and woke-ism on the left in the United States. All of those things are in no small way a reaction to global elites in the last 50 years, in which the WEF has played a very strong role.”
Although it’s clear world dynamics are changing, the momentum from decades of interconnected growth just keeps building. A record $28.5 trillion worth of goods was traded worldwide last year, according to the United Nations Conference on Trade and Development.
“Globalization has actually lifted 1 billion people out of poverty — and right now it’s caught in what I call the perfect storm of the three C’s: covid, climate change, conflict,” Pamela Coke-Hamilton, executive director of the International Trade Centre, said in a session. “Each one of those can deal a body blow to globalization. But the facts don’t support this.”
In the meantime, many businesses are scrambling to find new suppliers and manufacturers that can keep products moving even if there are shutdowns or shortages in one country. And unlike in the past, executives say they are increasingly willing to increase production or stock up on extra products — even if it means paying more.
Economic uncertainty and ongoing war cast a cloud over Davos
Toy giant MGA Entertainment, which for years has churned out popular brands like L.O.L. Surprise and Bratz in China, recently opened two factories in Mexico, with plans for a third in the coming months. It is also moving some production to India. After two years of delays and rising costs, chief executive Isaac Larian said it was worth paying more to manufacture elsewhere.
“With so many Chinese cities shut down, we just didn’t know when we were going to get anything,” Larian told The Post. “Factories couldn’t get labor, prices were going up, and provinces kept closing. Finally we said, ‘You know what, we have to try something new. It doesn’t just have to be China.’ ”
Some economists worry that a reshuffling of production and trade could reverse decades of progress.
“There’s a real danger of globalization being rolled back,” said Beata Javorcik, chief economist for the European Bank for Reconstruction and Development. “Businesses in particular are worried because it would be very easy to use the current situation to erect trade barriers in the name of building resilience.”
War, pandemic drive companies to shift supply chains, WTO chief says
But the mood in Davos wasn’t all glum. Many business owners said they remained optimistic, even in the face of crises including slowing economies and fast-rising inflation. This moment of international anxiety, they contended, would be short-lived.
“Globalization is not a good thing; it’s a great thing,” Loic Tassel, president of Procter & Gamble’s European operations, said in a session. “We come to the question, is it moving, is it pausing? I think it’s temporarily pausing. Our responsibility as leaders is to continue to ensure globalization keeps progressing, not because it is in the interest of the companies — which would be right anyway — but because it is the core interest of consumers.”
Even with globalization on hold — or unraveling or perfectly intact, depending on the view — the revelry in Davos continued after hours. Salesforce billionaire Marc Benioff hammered open a barrel of sake onstage at a Time Magazine party. Electronic music duo the Chainsmokers performed at a Cloudflare event. And Anthony Scaramucci hosted his annual wine-tasting extravaganza in a venue so packed that even former House Speaker Paul D. Ryan was forced to wait in line outside.
“I figured out that if you buy expensive wine, people show up,” said Scaramucci, a hedge fund manager perhaps best known for his 11-day stint as President Donald Trump’s communications director. “Davos is still relevant and valuable.”