Experts explain: where will future economic growth come from?
- The latest Agenda Dialogue brought together global leaders in finance and politics to discuss how to generate economic growth to build future markets.
- The session was part of the World Economic Forum’s Jobs Reset Summit.
- From the need to contain the pandemic to embracing diversity and growing the green economy, here are some of the key quotes from the session.
How can emerging and advanced economies generate the economic growth they need to recover from the pandemic, while developing in a sustainable and equitable manner?
This was the key issue debated at the last session of the Agenda Dialogues, which coincided with the Jobs Reset Summit of the World Economic Forum.
- Borge Brende, President, World Economic Forum Geneva;
- Heng Swee Keat, Deputy Prime Minister and Minister for Economic Policy Coordination of Singapore, Prime Minister’s Office, Singapore;
- Thomas J. Jordan, Chairman of the Executive Board of the Swiss National Bank;
- Beata Habyarimana, Minister of Commerce and Industry, Ministry of Commerce and Industry of Rwanda;
- Anila Denaj, Minister of Economy and Finance, Ministry of Economy and Finance of Albania;
- Alain Bejjani, Chief Executive Officer, Majid Al Futtaim Holding;
- Alexandre De Croo, Prime Minister of Belgium, Office of the Prime Minister of Belgium;
- Nishimura Yasutoshi, Minister of Economic and Fiscal Policy, Minister in charge of the fight against novel coronaviruses, Cabinet Office of Japan;
- Rajiv Shah, President of the Rockefeller Foundation;
- Saadia Zahidi, Director General, World Economic Forum in Geneva.
Here are some of the key quotes on where they see the greatest opportunity to build the ‘markets of tomorrow’ – and what needs to happen for a fair recovery:
Solve supply problems in Belgium
Consumer and business confidence has been at the highest level in Belgium since 2007, said Alexandre De Croo, but there are constraints on the supply side. So in the short term, to see growth and job creation, we need to tackle the supply side issues, he said.
In the longer term, there will be disruptions, but also transitions, he said. “But if there’s one place we don’t want disruption, it’s on the social side.”
He stressed the importance of on-the-job training, changes in market regulations and the emphasis on market concentration.
3 priorities for Singapore
Heng Swee Keat said the country’s “top priority” was to contain the pandemic. He called on governments to cooperate to fairly share information and vaccines through COVAX.
The pandemic has accelerated the digital revolution, he added. “To harness the potential of the digital economy, we need to harmonize standards, enable reliable data flow and facilitate cross-border transactions.
Singapore has signed digital economy deals with several countries and hopes more can join, he said.
The pandemic has also reminded us of the importance of biodiversity, he added, so we need to move to a green economy and mobilize funding to do so, as well as focus on re-qualification of people.
Embrace diversity in Japan
Japan must welcome “diverse talent” to its island nation, said Nishimura Yasutoshi.
“In the past, we were based on seniority and mainly on male workers,” he said. “We need to open up opportunities for young workers and women.”
Only 17% of girls embark on STEM careers, compared to 40% in the UK, he added.
“It can really drive our future if there are more women in STEM,” he said, adding that he hopes there will be Nobel Laureates in the future.
Green industrialization in Rwanda
Rwanda aspires to become a middle-income country, said Beata Habyarimana, describing some of the sources of future jobs that would help recovery and transition.
These include the liberalization of trade, through the African Continental Free Trade Area, which would lead countries to a regional value chain, and move countries from exporters of primary products and services to value-added products and services.
Green industrialization is one of the main sources of jobs, she added, saying Africa is in a good position to have nature-based industrialization and products.
Kigali Innovation City – a technological innovation hub, housing universities and biotechnology companies – contributes to the transition to a knowledge-based economy. “We cannot do without it.”
Knowledge-driven development in Albania
Knowledge-driven development is also essential in Albania, said Anila Denaj. Vocational training is very important, upgrading skills remains crucial and Albania is focusing on teaching ICT and STEM to secure a future for young people, she said.
Agriculture and manufacturing are key sectors for Albanian economic development and job creation and are undergoing technological transformations, she said.
Direct and indirect support is needed during the transformation period for SMEs, and a higher budget for health and social services is also required. She added that Albania is trying to attract local projects and create regional value chains in the bloc “for a much bigger market for each of our countries”.
The World Economic Forum Jobs Reset Summit brings together leaders from business, government, civil society, the media and the general public to set a new agenda for growth, jobs, skills and equity.
The two-day virtual event, to be held on June 1-2, 2021, will address the most critical areas of debate, define courses of action and mobilize the most influential leaders and organizations to work together to accelerate progress.
The summit will develop new frameworks, shape innovative solutions and accelerate action on four thematic pillars: economic growth, recovery and transformation; Labor, wages and job creation; Education, skills and lifelong learning; and equity, inclusion and social justice.
Good cooperation between public and private sectors is really important, said Thomas J. Jordan – and they both have a role to play, with the public sector focusing on the framework, while the private sector focusing on new markets.
“Governments should avoid following industrial policy, but let the markets find a balance,” he said.
We must ensure that the public debt remains at a sustainable level or will experience a sharp rise in interest rates, he added.
COVID-19 has reset existing beliefs about the importance of opening up to better trade and making sure we work together as a stakeholder economy to advance singular goals, said Alain Bejjani.
We cannot take a one-size-fits-all approach to recovery. But to ensure its sustainability and fairness, we have to accept that different regions have different priorities, he added.
“In some geographic areas, we should continue to build infrastructure to embrace the Fourth Industrial Revolution. In other areas, we need to make sure that we get the right kind of growth and balance between the public and private sectors.
“There is more we need to do and make sure our stakeholders find what is there for them, or we will be less equipped than we were until when this pandemic took us by storm. “
The private sector is very good at innovation, and it’s a theme that cuts across all sectors, said Heng Swee Keat.
The role of government is to create the conditions for innovation through investments in education and research: “We must not forget in the case of vaccines, the huge investments that governments have made”, did he declare.
He added that we must strive for an “optimal division of labor” between government and the private sector, and that governments must continue to build bridges with the private sector.
“Vaccines are an incredible showcase of what is possible if everyone brings together what they do best,” added By Croo. “This is how we will fight climate change, and this is how we will approach creating jobs in the digital space.”
A recovery that leaves no one behind
Rajiv shah warned that we envision “a decade of great divergence,” where low-income countries – home to as many as five billion people – are left behind by those who have had access to vaccines and fiscal stimulus.
Developing countries have only achieved a recovery of 2% of GDP, which is why people will be brought below the poverty line, he added.
But there are opportunities for public and private actors to come together to find solutions, he added. “We have a major funding opportunity to meet the needs of green finance.
He continued: We now know that nations can borrow and spend in times of crisis. When the richer countries recover, we must remember that there are countries that could become a “variant reservoir” of COVID if we do not work together.
Saadia Zahidi describes the six ways we can build an economy that leaves no one behind in his blog post on Building Back Broader. These include focusing on the markets of tomorrow, giving priority to requalification and upgrading efforts, moving to the jobs of the future, building the care economy, reforming education and integrating equity in the new economy.
Watch the full session here.