[VIEWPOINT]Adapt to a changing worldDavos, Switzerland, is the background for the book “The Magic Mountain” by the Nobel Prize-winning German novelist Thomas Mann. These days, the town is known as a retreat for patients with respiratory disorders. It can be said that the 2,300 or so politicians, economists and social leaders of the world gathered at the Davos Forum were actually there to treat their internal sufferings, just like the characters in the book “The Magic Mountain.”
There are more than a few things the world economy is suffering from these days. There are problems like political unrest in the Middle East, the accumulated deficits of the United States, the rise of international oil prices due to the high-speed development of the Chinese economy and sudden changes in exchange rates, just to name a few. These factors are making it even more difficult to predict the future of the world economy. There is no way that the governments and corporations of each country could be happy about these sudden changes. After all, governments that fail to adapt to these changing circumstances could collapse.
Lawrence Henry Summers, the former secretary of the treasury and the current president of Harvard University, said in a speech that the world is facing a third economic revolution, the first two being the Renaissance and the Industrial Revolution. It means that the speed and effects of change are much faster and wider. The source of this revolution is the rise of China and India, and the appearance of subversive new technologies.
The two huge countries, China and India, had been sleeping but are now at the forefront of the international economy, changing its domain. It is the common analysis of representatives of various countries gathered at Davos that the rise in oil prices and competition over natural resources definitely have something to do with the sudden rise of “Chindia.” Countries with advanced economies did not hide their amazement and perplexity at the power of “economies of scale” presented by China and India, which they present on a national scale.
Subversive new technologies that defy the status quo are pushing even well-known international mega-corporations to the brink of competition. Many CEOs that atten-ded the forum said the speed of new technological development and its circulation and the dismantlement of existing systems are making it hard for corporations to survive without endless self-innovation and differentiation. These statements show what a harsh fate the global competitive system has in store for corporations.
Another interesting topic that came up at the forum was the problem of regionalism. Recently, many countries in different parts of the world that have been provoked by the success of the European Union have been trying to start economic integration in their regions, though there is a difference in the impact and speed of these moves. Leaders in Asia and Africa have also stressed the need for economic integration, and the attendants here all seemed to be generally in favor of the idea. However, there is a lot of debate on how much sovereign power the participating countries should have to give up. An opinion has also been presented that it would be best to increase the number of bilateral Free Trade Agreements rather than carry out an economic integration among several countries. In any case, it seems clear that we have to pay close attention to the rise of regionalism, which is being caused by regional economic integration.
The theme of this Davos Forum was “The Creative Imperative.” The intention was for political, economic, social and cultural leaders to come together and find solutions to the problems caused by changes in the world economy through open discussion. Witnessing the changes in the world economy and the efforts of the governments and corporations to cope with them, I naturally started to recall the way Korea is reacting under the same situation. The problems that countries around the world have in common are ours as much as they are theirs. In addition, Korea has other problems, such as social polarization, youth unemployment, labor conflicts, a low birth rate and an aging society. But it looks that even though the world is changing every day, our country is still too hung up in the trees of its internal problems to see the forest of global competition and changes in the arena of the world economy. Various profit-making organizations still provoke conflicts with one-sided opinions to solidify their position or to earn large rewards. Conflicts and disorder are happening more often and in more places in society every day, and they are getting more entrenched, too.
It is now hard to survive in this world unless we adapt to the changing environment like any organism would. We need to open our eyes to the changes in the world.
* The writer is the vice chairman of The Federation of Korean Industries. Translation by the JoongAng Daily staff.
by Cho Kun-ho