The large-scale involuntary movement of people is the second most likely global risk © Press Association Images
The large-scale involuntary movement of people is the second most likely global risk © Press Association Images

Wealth disparity most important driver for global events, says WEF

Rising income and wealth disparity has been identified as the most important trend determining global events over the next 10 years, according to the World Economic Forum (WEF).

The WEF said the trend was identified in a survey for its Global Risks Report, which highlights five key challenges. They are: reviving economic growth, reforming market capitalism, facing up to the importance of identity and community, managing technological change and protecting and strengthening systems of global cooperation.

In the report Klaus Schwab, founder and executive chairman of the WEF, said: “Pervasive corruption, short-termism and unequal distribution of the benefits of growth suggest the capitalist economic model may not be delivering for people.”

The report said there was a need to revive growth “but the growing mood of anti-establishment populism suggests we have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the list”.

The WEF suggests a number of ways this could be achieved, such as switching from monetary to fiscal policy and reforming welfare and income policies.

The report said it was necessary to “reconcile identity nationalism and multiculturalism”.

“As with globalisation, the overall economic benefits brought by immigration are not felt by all sections of society,” said the report. “And immigration creates cultural tensions: there is a need to allow space for religious tolerance without opening the door to extremism, and a need to encourage the diversity that brings innovation without fostering resentment.”

The WEF said biotechnologies and artificial intelligence and robotics were the two areas of technology most in need of better governance.

Meanwhile, businesses have a role to play in maintaining civic freedoms because of a link between democratic systems and increases in GDP, the reduction of corruption and the promotion of human rights. “Companies operating in countries where human rights are not respected and civil society is suppressed run a potentially high reputational risk from being associated with environmental or human rights violations in supply chains or at production sites,” said the report.

In terms of the world order, the report said in 2016 Russia, South Africa, Burundi and Gambia withdrew from the International Criminal Court and China rejected the verdict of the international tribunal on the South China Sea.

“In a worrying sign of deteriorating commitment to global cooperation, states are stepping back from mechanisms set up to underpin international security through mutual accountability and respect for common norms,” said the WEF.

“The year 2017 will present a pivotal moment for the global community,” said Schwab. “The threat of a less cooperative, more inward-looking world also creates the opportunity to address global risks and the trends that drive them. This will require responsive and responsible leadership with a deeper commitment to inclusive development and equitable growth, both nationally and globally.”

The report is a launchpad for discussion at next week’s meeting of the WEF in Davos.

Top five risks by likelihood:

  1. Extreme weather events
  2. Large scale involuntary migration
  3. Natural disasters
  4. Terrorist attacks
  5. Data fraud or theft

Top five risks by impact:

  1. Weapons of mass destruction
  2. Extreme weather events
  3. Water crises
  4. Natural disasters
  5. Failure of climate-change mitigation and adaptation

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