Welcome, Guest  |  Login    Register

Davos Agenda: Growth, the Digital Divide, and Cybersecurity

Posted By Paul Tate, January 20, 2014 at 8:43 AM, in Category: Manufacturing Leadership Community

As the world’s top politicians, business leaders, academics and economists gather for their annual talk-fest on the snowy slopes of Davos, Switzerland this week, a number of issues on their agenda may have significant implications for manufacturing in the year ahead.

Themed “The Reshaping of the World: Consequences for Society, Politics and Business” (22-25 January), this year’s event strives to help leaders map out the latest shifts in economic, social, scientific and technological change and to move from the responsive, crisis-driven decision-making tendencies of the last few years into more proactive, strategy-driven approaches for the future.

Here are three global trends up for debate at this year’s Davos that are likely to impact the global manufacturing industry in 2014:  

* Advanced Economies To Drive Global Growth

After years of recessionary economic turbulence, the world’s major economies will see renewed growth in 2014 and record their strongest performances since the end of the last decade, predicts Dr. Nariman Behravesh, chief economist at global analytics company IHS.

“According to IHS estimates,” said Behravesh in a pre-Davos briefing, “in 2014, emerging markets will contribute the least amount to global growth since 2010. Economies considered ‘dull and old’, like the U.S., U.K., Germany and Japan, will actually be 2014’s new locomotives of growth.”

He notes that substantial progress has been made in reducing both public- and private-sector debt in advanced economies, especially in the United States. “American households and banks have aggressively reduced debt levels, while the U.S. public-sector debt has been stabilized. Europe, as well, has made progress on fiscal austerity,” he said.

Meanwhile the once fast-track BRICS nations are now facing new challenges: “The “BRICS party” of the 2000s was fueled by three global drivers: a credit boom, a commodities “super-cycle” propelled in large part by China’s double-digit growth rates, and “hyper-globalization” as multinational corporations expanded global supply chains. All three of these drivers have lost their steam, leaving many emerging markets high and dry,” he said.

“We are seeing rising labor costs in the emerging world, stagnant wages in the developed world and low energy costs in North America. As a result, we will likely see a re-balancing of global investment flows back into ‘dull and old’ economies,” he added.

* ICT Competitiveness And The Digital Divide

In terms of technology, a recent World Economic Forum (WEF)/INSEAD benchmark study of “Networked Readiness” across global economies showed northern European countries dominating the Top 10 and the digital divide increasing as developing nations struggle to gain economic traction from rapid technological change.

The WEF Networked Readiness Index is based on comparisons of a nation’s information and communications technology (ICT) infrastructure, cost of access, available skills, ICT usage, business and innovation environment, and the country’s regulatory and political framework.

In the latest ranking, the U.S. featured only at number 9 in the Top 10, overtaken by Finland, Singapore, Sweden, Netherlands, Norway, Switzerland, the U.K. and Denmark.  “The US benefits from strong ICT infrastructure and innovation but is hindered by its political and regulatory environment,” says the report.

Taiwan makes up the 10th place in the latest ranking, while China has dropped 7 places to number 58.  The report notes that many emerging nations are now failing to translate ICT investments into tangible competitive, development and employment benefits, continuing to widen the global digital divide.

“The BRICS’ economies continue to lag behind in the rankings,” say the authors. “The sustained rapid economic growth of past years in some of these countries may be in jeopardy unless the right investments are made in ICT, skills and innovation.” 

* Cybersecurity Needs to Improve 

For advanced and developing economies alike, however, this increasing dependence on networked technologies is creating new vulnerabilities. 

A new report, called Risk and Responsibility in a Hyper-Connected World and released today by the WEF and McKinsey, notes that major technology trends, including massive analytics, cloud computing and big data, could create between $9.6 trillion and $21.6 trillion in value for the global economy. However, if attacker sophistication outpaces defender capabilities – resulting in more destructive attacks – a wave of new regulations and corporate policies could slow innovation, with an aggregate impact of approximately $3 trillion by 2020.

“There needs to be a fundamental change in the way we protect ourselves from cyber attacks. Check-the-box compliance-based approaches simply don’t work anymore,” said James Kaplan, a partner at McKinsey. “Companies and public institutions need to build cybersecurity capabilities that are scalable, deeply integrated into the broader IT environment and focused on addressing the more important business risks.” 

Looks like it could be an interesting week for the world’s leaders in Davos – both off-piste and on the global stage. 


user_avatar
Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive



Add Pingback

Comments

You must be logged in to leave a reply. Login »