"Public and private sectors should collaborate more to benefit society," said Paul Sagan, President of U.S. Akamai Technologies to the staff of World Economic Forum during the annual forum last month.
Many of the world's business leaders echoed similar sentiments. Charles Prince, CEO of Citigroup, shared that a business can only thrive when it shows concern for the public it serves. Business leaders must join forces to improve life for the citizens of the world, according to Nandan Nilekani, President of the Indian company Infosys. "It is imperative that business understands the moral and business case of corporate social responsibility," said Michael Rake, Chairman of KPMG.
'The Creative Imperative'
The Forum brought together business, political, academic and scientific leaders during the annual World Economic Forum in Davos, Switzerland, to iron out differences, find common ground and to meet today's dynamic business challenges as a group.
"The creative imperative" was the theme for this year's annual meeting.
"Five to seven years ago the business environment was being defined by globalization," said Jonathan Schmidt, Director of the World Economic Forum. While still an important factor, "cheaper, better, faster" is no longer a sure point of differentiation.
"This generation of companies is creative, innovative, and design-led, connecting the company more directly with the customer's needs and aspirations… If you're looking for solutions to complex problems like climate change, stable democracies, disaster relief, or job creation, business is increasingly playing an important leadership role."
Public-Private Partnerships
Corporate strategy in philanthropy is seeing a shift. Instead of writing checks for charities, companies will go into partnerships with governments and not-for-profit organizations to actively bring their knowledge and experience to developing countries.
"Companies have skills and capabilities that can be applied to development," said World Economic Forum Managing Director Richard Samans in a January press release. "Often these capabilities turn out to be more valuable than simply writing a check."
No longer will businesses sit on the sidelines and see their funds line the pockets of a few people in developing nations. "Business is joining the fight against hunger through a wider strategic action plan," said Unilever Chairman Antony Burgmans.
Now, businesses will teach farmers the skills to improve and increase production. Companies will develop better seeds for crops and will bring fertilizer and other farming equipment directly to disadvantaged farmers.
Information technology firms are helping schools in impoverished areas develop improved school curricula, help teachers hone their teaching skills and bring computer equipment and training to schools directly, according to John Chambers, CEO of Cisco Systems, Inc.
"An effective educational system is critical for economic growth and the development of a thriving private sector," said Chambers. "Success in improving global education can only be achieved through strong public-private partnerships, the co-application of core competencies, resources and sustained investment.
The world's government and business leaders pro-actively laid the foundation for projects that address disaster relief, poverty in developing countries and elimination of corruption. The groundwork for cooperative efforts between businesses, governments and the people was laid. The network for financing projects was established and alliances were formed.
"I think the Forum is here to help us to find out what the main issues are and then it is up to us to act individually," said Peter Brabeck, Chairman and CEO of Nestlé S.A.
"Some of what we achieved in the trade sessions… We received excellent inputs to create a more balanced world," said Mukesh Ambani, Chairman and Managing Director of Reliance Industries.
Imbalances a Threat to Developing Nations
"While the global economy is growing very strongly, it could be described as astonishingly unbalanced," said Martin Wolf, Associate Editor and Chief Economic Commentator for the Financial Times.
Imbalances include the large account deficit and noticeable slow down in savings by the U.S. and its consumers. The imbalance exists because the U.S. and other Western nations are import driven, while most Asian countries are export driven. Canadian, U.S. and experts from other nations agree that such imbalances cannot be sustained in the long-term.
"Global imbalances are deepening and that has serious consequences for developing countries like India," said Palaniappan Chidambaram, India's Minister of Finance.
"There are potential triggers that could create serious consequences for the global economy. The first is a southward movement of the dollar. The second is an unexpected increase in U.S. interest rates; [and the third] is spiraling energy prices [which] will lead to inflationary expectations."
It is important that India and China increase its domestic consumption, to create an inward instead of outward flow of goods.
China supports the U.S. economy by investing its dollars in the U.S. "It is not sustainable in the long run that the emerging world would finance the industrial world," said Jean-Claude Trichet, European Central Bank President.
"Asia's central bankers cannot go on financing the extravagance of the U.S. consumer, supporting the dollar despite a yawning U.S. current account deficit," warned Stephen Roach, Morgan Stanley's U.S. Chief Economist.
However, there are signs the U.S. consumer is halting its spending spree. The jump in gasoline prices was the first wake-up call, while the media's reports on layoffs throughout the U.S. have further slowed consumer spending.
"When, and if this downturn materializes, the developing economies of Asia and elsewhere could be in trouble, having failed to develop sufficient domestic demand, they remain dependent for growth on sales to the American consumer," said Roach.
"I think this is the year to watch out very carefully for the end of the great American spending binge."
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