With the theme of this year's World Economic Forum (WEF) Annual Meeting being "Stemming the Tide of Fragmentation," experts gather in Davos, Switzerland, to put these fragmented pieces together in an attempt to find the solutions. On the opening day of the meeting, several panels remarked that the lack of trust in institutions and issues carried over from last year had been instrumental in creating the fragmentation—eroding societal equity and widening the economic gap. Having discussed that, the forum made recommendations to mend these fragments and, eventually, completely seal the crack.
THE FRAGMENTED WORLD
A state of fragmentation is detrimental to the global economy and society as a whole. Many panels in the meeting noted that the erosion of trust in institutions led to a decline in investment and economic growth, resulting in rising inequality. More inequality, in turn, caused social unrest, a reduction in global trade, and a downturn in investment and economic development. Apart from that, various issues that arose in recent years, including ongoing conflicts and the economic effects of the pandemic, are also the main factors that created a fragmented world. According to an International Monetary Fund report, the pandemic, in tandem with conflicts, has caused the deepest global recession since the Great Depression of the 1930s.
STEMMING THE TIDE
The WEF has proposed that Public-Private-Partnerships (PPPs) may serve as a potential solution to address pressing global issues such as economic growth, inequality, and social unrest. These PPPs involve collaboration between businesses, governments, and international organizations, utilizing the resources and expertise of both the private and public sectors. Such partnerships can come in many forms, including public investment in infrastructure building (which is handled by the private sector), government-sponsored corporate undertaking (such as government grants for beneficial research), and joint societal development programs (school, hospital building, etc.) In addition to PPPs, governments can also implement policies that promote economic growth and social inclusion, such as progressive taxation and social safety nets.
All of these can be utilized by businesses. Companies can gain trust with the public sector through their PPPs' cooperation, resulting in a deepened stakeholder relationship. The public sector would benefit from the private sector's expertise, while the latter could create more output through spurred economic activities. When society is improved, businesses' performance also improves as they have a higher-quality workforce and more customers with more purchasing power.
Although fragmentation abounds nowadays and negatively affects the global economy and society, the WEF notes that PPPs can play a critical role in addressing this fragmentation by fostering trust and cooperation between different sectors and stakeholders. Businesses, governments, and international organizations must work together to bridge the gap and create a more inclusive and sustainable future.
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