Schwab neatly underscores the key challenge facing the global community as its leaders prepare to meet at his annual conference in Davos. The year is likely to see further deterioration in rich-poor relations. Gloom is already in the air. The worldwide cohort of the poor has never been larger–nearly a third of the global population of 5.9 billion lives under the poverty line (defined as annual per capita income below the equivalent of $300). A new UNICEF report on the “State of the World’s Children” noted that 12 million children under the age of 5 die each year from preventable illnesses, including malnutrition (that’s 33,000 funerals each day). World population is growing at the rate of 100 million a year, more than 90 percent of the growth in 127 developing countries that can least afford such demographic increases. Some 55 million people were uprooted from their homes in 1997 because of wars and ethnic conflicts. Untrammeled population growth and scarce development resources contribute to civil unrest, affecting rich and poor countries alike in what Schwab calls “our globalized world of connectedness.” But despite the gloom, there are signs of some hope for the poor countries:
True, 1998 is likely to be a wan year for the developing nations: the 1997 figure of $50 billion in aid from donors is projected to fall to $40 billion. But donors are demanding greater accountability from developing nations; Norway, for example, dispatches its own auditors to monitor projects. This could help streamline grass-roots programs and ensure better use of foreign aid–even if local officials resent closer scrutiny by foreign donors.
Private-sector investment in developing countries, estimated at about $300 billion in 1997, is likely to fall precipitously, not the least because of continuing uncertainties in East Asian markets. But such investment–advocated by the high priests of donor countries who proclaim the virtues of “trade, not aid”–rarely generates many new jobs in developing countries where the labor force swells exponentially each year. A case in point is India, where barely $1 billion of the promised $5 billion of overseas investment actually flowed into the country last year, scarcely making a dent in the national unemployment rate of 40 percent. Organizations such as the World Business Council on Sustainable Development and the International Chamber of Commerce are accelerating their efforts to persuade developing-country entrepreneurs to channel more of their own funds into projects that promote economic growth and revitalize local ecological conditions. The new mantra, one that the representatives of the developing world are likely to make heard at Davos: show us the jobs!
The International Monetary Fund now virtually runs the economies of more than 75 developing countries. In the coming year, priorities are likely to focus on “nongrowth” efforts such as trimming bureaucracies, ending subsidies for food and fuel and tightening monetary policies–all favorite placebos of the IMF. Such belt-tightening risks aggravating social and political tensions in already fragile societies. The IMF’s stepped-up watchdog role, however, could help reduce the endemic corruption and waste that characterize many developing-nation treasuries.
European nations, traditionally receptive to the needs of developing countries, are moving into unprecedented leadership slots in the development field. This could mean a new infusion of ideas. Klaus Topfer, Germany’s urban-affairs minister, has just been named executive director of the U.N. Environment Programme. The dynamic, no-nonsense Topfer is a good bet to revitalize the moribund Nairobi-based organization. Former Norwegian prime minister Gro Harlem Brundtland is competing with Pakistan’s Nafis Sadik–currently executive director of the U.N. Population Fund–for director general of the mismanaged and demoralized World Health Organization.
Meanwhile, as Klaus Schwab prepares for the Davos meetings, another important development is taking shape that could augur well for North-South relations. Professor Schwab is initiating a new project, Trustees 21, that would mobilize business, nongovernmental organizations, foundations, government and academic figures to come up with ideas and programs for generating prosperity, environmental security and protecting human rights. “The objective is to develop leadership and empowerment, to harmonize national, regional and global identities,” Schwab says. His enterprise is an encouraging development in what otherwise may seem a time of continuing despair for much of the world’s population.
