Economic, social turmoil risk undermining progress of globalization – WEF

The world’s vulnerability to further economic shocks and social upheaval risk is undermining the progress that globalization has brought, the World Economic Forum (WEF) warns in its Global Risks 2012 report published January 11, 2012.

The report which is the seventh edition of the Davos-based Forum, indicated that chronic fiscal imbalances and severe income disparity are the risks seen as most prevalent over the next 10 years.

“These risks in tandem threaten global growth as they are drivers of nationalism, populism and protectionism at a time when the world remains vulnerable to systemic financial shocks, as well as possible food and water crises,” said the WEF report based on the findings of a survey of 469 experts and industry leaders.

The industry leaders as well as expects, according to the report noted that “a shift of concern from environmental risks to socio-economic risks compared to a year ago” and were worried that the world’s institutions are ill-equipped to cope with today’s interconnected, rapidly evolving risks.

“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs,” said Lee Howell, the World Economic Forum Managing Director responsible for the report.

Lee Howell added, “This new malaise is particularly acute in the industrialized countries that historically have been a source of great confidence and bold ideas.”

The Global Risks 2012 report highlighted three major risk cases of global concern – Seeds of Dystopia, Unsafe Safeguards and the Dark Side of Connectivity.

The Seeds of Dystopia is the bulging populations of young people with few prospects, growing numbers of retirees depending on debt-saddled states (stoking fiscal imbalances) and the expanding gap between rich and poor are all fuelling resentment worldwide.

The second which is the “Unsafe Safeguards”, the WEF defines as “policies, norms and institutions from the 20th century that may no longer protect us in a more complex and interdependent world. The weakness of existing safeguards is exposed by risks related to emerging technologies, financial interdependence, resource depletion and climate change, leaving society vulnerable.”

The third indicator, “Dark Side of Connectivity”, is the daily lives almost entirely dependent on connected online systems, making persons susceptible to malicious individuals, institutions and nations that increasingly have the ability to unleash devastating cyber attacks remotely and anonymously, according to the WEF.

The Forum has indicated the three risk cases will be the focus of a special session at its 2012 Annual Meeting to be held in Davos-Klosters, Switzerland from January 25-29, 2012.

By Ekow Quandzie

Watch the Global Risk Report 2012

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