Globalisation and technology have brought many gains over the last twenty years. People, goods and services, capital and information all flow more easily and quickly across the world. Being ‘connected’, whether in business, government or as an individual, has come to be seen as a universal requirement in the 21st century. But has everyone benefitted?
This is a question that goes to the heart of the debate on inclusive growth which has become increasingly important following the last year where electorates have challenged the existing order.
The view from CEOs in PwC’s 20th Annual Global CEO Survey, launched in Davos, is that while we have seen significant benefits from increased trade and mobility as well as skilled work forces, globalisation per se has done little to address inequality. Indeed, almost half (44%) of the CEOs surveyed felt that globalisation had not helped at all to close the gap between rich and poor, similar to the proportion of a parallel poll of the public (39%).
Closing the gap between rich and poor
With over a half (53%) of CEOs believing that global economic growth will remain static over the next 12 months, and ‘uncertain economic growth’ being the top threat to growth prospects (replacing over-regulation from last year), it is clear that this year will involve further head scratching on what to do from those in government, at national and local levels.
This is particularly the case given that CEOs see geopolitical uncertainty in their top five threats while many CEOs (58%) agree that the trend toward closed national policies creates challenges for business and makes it more difficult to compete in a more global market place.
So what’s to be done? There are no silver bullets but it is clear that policy action can help if directed to support the top drivers for growth, identified by CEOs surveyed as innovation, technology and human capital. Over three quarters (77%) of CEOs surveyed are concerned about a lack of availability of key skills: an area where governments can have a direct impact.
In addition, business needs effective, efficient and sustainable infrastructure – the backbone on which economic success and prosperity can grow. This includes providing the assets which deliver public services and improve the wellbeing for a nation (such as timely transport, quality education and affordable housing).
But government action on its own is not enough: business has an important role too. For instance, business and political leaders alike recognise the critical role infrastructure investment can play to bring a wide range of benefits for business and society.
CEOs interviewed commented that collaboration between business and government is needed to drive the kind of systemic change which will enable the proceeds of globalisation and new technology to be distributed in a way that closes the gap between rich and poor.
The interviews with CEOs reveal, however, the polarised views on whether such collaboration can actually be achieved to deliver more inclusive growth. Some say ‘we have to be more open and honest and more proactive in talking to government’ and ‘be more active at promoting the positive economic impact of globalisation’. Others are less hopeful and call for governments to be more radical and ‘provide the leadership through policy change where change is required to benefit society as a whole.’
Perhaps the solution is for both business and governments to go ‘glocal’: ‘think global, act local’ and work to ensure that the proceeds of growth are seen by the many, not the few.