The annual World Economic Forum from Davos, Switzerland, has just ended – a good opportunity to analyze the main challenges faced by the world – from cybersecurity, global trade and cryptocurrency to cooperation, equal opportunities, humanitarian crisis, and change climate.
In Romania, the echoes of these topics discussed by the political and business world leaders do not make the headlines. The public agenda is under the sign of urgency and cannot include such „abstractions”. Leaving apart the scale of local leadership, one thinks sporadically and only locally. However, the world ensemble counts on those who project the future, integrate trends in the policies they devise and are oriented towards the economy of progress.
In order to be sustainable, economic progress must be based on solid fiscal policy, globally developed trade, living standards, in an unpolluted environment, linked to technology development and with high productivity and competitiveness.
- Tax policies can be a mean of regulating social inequalities as long as they address legislation loopholes, mitigate economic hardships for the benefit of the poor, harness digitalization, is value-based, and sustainable.
- Global trade grew by 8% annually until the 2008 financial crisis. Then, the average annual growth rate was 3% in post-crisis years. The benefits sharing of this revenue growth has been uneven. According to the IMF, over the past 30 years, 53% of countries have seen an increase in income inequality, which has weakened political adherence to global trade.
- The rise in living standards correlates with the overall productivity of work. According to the Economic Policy Institute, between 1973 and 2013, productivity grew by 74%, while the salary increased by only 12.5%. During the financial crisis of 2008, the fall in productivity even led to a drop in the real value of wages. In addition, technological transformations, markets globalization have affected the distribution of revenue.
- Climate change, pollution and resource scarcity affect the economies of states and companies. According to the IMF, GDP per capita in low-income countries would be 9% lower in 2100 if there were no climate change. The impact of environmental change affects agricultural production and productivity, health and mortality. Economic policies and business practices need to take account of environmental constraints to ensure sustainable growth in the future.
- Technology development, increasingly fast, tests social cohesion and requires public policy responses to promote innovation and productivity. According to an analysis by Gartner, the number of connected devices will increase from 8.4 billion in 2017 to 20.4 billion in 2020. Technological advancement brings together the physical world, the virtual and the biological world. It organizes the reality and prompts the rethinking of the economic base for development of the states.
Last year’s performance of the global economy did not meet expectations. Advances in technology, political transformation, the transition to a new global trade and international cooperation framework have created dissatisfaction, generated uncertainty and economic tensions. The economic reality has become complicated and, therefore, the mission of the leaders has also been complicated. The old canons of economic conduct are replaced, markets are being restructured, unconventional exchange environments are emerging that put in motion capitals expressed in electronic coins. The horizon of the coming years brings many challenges and few answers. Will the economy of progress be a “Frankenstein or a modern Prometheus”?