Every year, the World Economic Forum (WEF) issues a publication, The Global Risks Report, polling 750 thought leaders about the largest risks they see on the worldwide horizon, and those that have the most potential to affect developments across the globe.
The Global Risks Report is a tool for planning business strategy and understanding technology news going forward, especially since the risks are often interconnected and the solutions dependent upon each other.
Here, we look at the top two global risks. In Part II, we will explore the remaining three.
Risk #1: Economic Growth and Reform
The WEC ranked income and economic growth and inequality as one of the most significant risks, especially in their potential to contribute to political and economic developments over the next 10 years.
The report targeted reviving economic growth as a key need. Genuinely healthy rates of economic growth have been hard to come by in the developed world for some time. The report expressed concern that historically low interest rates globally, including in the U.S. and much of Europe, had stimulated economies enough for healthy growth rates to resume.
The WEF sees the economic slowdown in China as a significant risk as well, observing that last year the yuan’s loss against the U.S. dollar was the largest in more than 20 years. As a result, the yuan was the poorest performing currency of a major Asian country in 2016.
Concern was also expressed about the role of economic organization vis-à-vis the other global risks highlighted. A Harvard economist, Dani Rodrik, described a “globalization trilemma” in which only two out of three issues – democracy, national sovereignty, and world economic integration – could be compatible at the same time.
Given recent trends in both the U.S. and Europe that are unwinding at least some aspects of economic integration, like the Trans-Pacific Partnership and the European Union, democracy and national sovereignty are seemingly moving to the fore.
Risk #2: Facing Up to the Importance of Identity and Community
On the democracy and national sovereignty front, the WEF’s report highlighted issues of identity and national culture – and the risk of not understanding how important those issues are.
The report noted that many contemporary political and social movements, including gender equity, multiculturalism, openness to sexual orientation, and international cooperation, led many voters to feel left behind. Voters who were older and less educated may particularly feel that.
In any event, the U.K.’s leaving the EU, the election of Donald J. Trump, and the rise of populist movements in several European countries highlighted how important issues of national pride, identity, and culture were to the voting public. Candidates once on the outside of political power were able to connect to voters much more adequately than traditional candidates.
The report also noted that older voters fueled political movements in 2016. Given demographic movements toward an aging population, this may remain the status quo going forward.