Day one at Davos and, overall, the mood strikes me as upbeat and determined. Determined to find a solution to the crisis that currently grips Europe. Determined to find a way to ensure that the benefits of capitalism do not sow the seeds of inequality. Determined to find ways of, as the theme of the World Economic Forum states, “improving the state of the world.”
That was evident in two sessions I attended today about parts of the world our business focuses on a great deal – Latin America and Europe.
First, the panel I attended on “The New Context in Latin America.” The panel shared an interesting perspective: while the region’s GDP growth rate of 3-4 percent over the past several years looks good in comparison with much of the rest of the world, it is disappointing from a regional expectations point of view. There was also a fair amount of agreement around the fact that the key to capturing Latin America’s promise lies in improving labor productivity (a theme which will arise in the European debates, as well).
Two of the more interesting topics debated: One, how long Latin America can be “the region of the future” and, two, an interesting debate centered around the benefits of State capitalism, under which previously state-owned enterprises are “floated” through a public offering and become publicly-held. Do these enterprises with their private ownership yet public history and state sponsorship provide a good model for growth, or do they crowd out private investment, entrepreneurialism, innovation and competition? I’m interested in where our experts in the region come down on these debates – and if you have an opinion, please leave a comment below.
Overall, the mood was bullish on the region, with acknowledgment that there is much work to be done relative to reform if Latin America is to make the most of its potential.
The discussion around Europe was just as interesting. There, the consensus was clear: frustration over the lack of progress in finding a “fix” to what ails the region. However, one observer noted that part of the reason for lack of progress could be fundamental disagreement around its causes. Three very clear schools of thought about what those are arose: lack of labor productivity, lack of growth, and too much government spending. I think the reality lies somewhere in the fact that all these factors, along with others, played a role in contributing to the situation we’re in. However, I did find it interesting that Angela Merkel, in her opening address to the forum, did cite the labor productivity issue as one that holds the key to Europe’s revival. She called for a gradual migration to a “best practices” model (no one questioned her as to which country’s practices she thought were best!) where labor is more mobile, more adaptable and more competitive.
The panel on Europe concluded that Europe will find a way through its current predicament, and the majority felt that the pain of seceding from the EU would be worse than the pain of the austerity plans needed to help “right the ship.”
For additional thoughts from Peter on Europe, watch this video.