Notebook

Return of the Davos Man

Prime Minister Narendra Modi
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The economic rationale of the Prime Minister's presence at the annual WEF gathering in Switzerland

WHAT A DIFFERENCE a year can make. In 2017, we witnessed a ‘populist’ uprising across the world. Voters in Britain chose to exit the European Union. Across the Atlantic, voters elected a president who by temperament is set against the globalising elite that dominated the US even before the end of the Cold War. These reverberations were felt in the alleged haunt of such elites from across the world: Davos. ‘Globalisation’ became a dirty word and matters came to such a pass that Xi Jinping, the president of China, was handed the mantle of preserving the cause of a world without barriers.

A year on, things have returned to normalcy. Donald Trump is expected to attend the annual gathering in Switzerland of the World Economic Forum (WEF), as is Narendra Modi, the first Indian Prime Minister in the last two decades to attend the annual conclave. The epithet ‘Davos Man’ has lost its bite.

Antipathy towards the gathering can be traced at least to the late 1990s when activists and Non-Governmental Organisations (NGOs)—and they have their own jet-setting and globalised elite—got their act together. From organising protests across countries to strategically well-thought media campaigns, the gathering at Davos began to be viewed as some kind of conspiracy on part of the ‘1 per cent’ against everyone else. The huge rise in economic inequality within countries did not help matters. In any case, the regular risk reports issued from Davos took note of issues such as inequality as a threat to the global system. But to no avail. The place, the men and women, and the idea itself attracted opprobrium that has not gone away.

As with other conspiracy theories, there’s not much in the idea of a globalising elite against everyone else. The idea of a calm meeting place where business, political and other leaders can gather, discuss pressing issues and keep flows of resources, investments and ideas running without a hitch, is nothing to be alarmed about. There are other institutions such as the World Trade Organization, regional groupings such as ASEAN and the Bretton Woods institutions, where the nuts and bolts of global problems can be fixed. But an informal gathering where there are few of the pressures associated with other formal settings is an essential element in keeping things in order—although the WEF has never made any grandiose claims and kept its aims simple.

From an Indian perspective, anti-globalisation never made any sense. The country’s rapid growth since 1991 owes much to huge inflows of investments, ideas and technology since then. When Prime Minister Modi visits Davos for two days from January 22nd, his sights will be fixed on getting more for India. In this respect, Davos will not be any different from other international engagements for him. He goes to Switzerland at a time when domestic investment growth in India has fallen to a multi-year low and there are no quick ways of addressing the issue that has been kept pending for more than a decade now. There have been reforms in the last one year to fix some of the problems that impede investment growth, for example the huge pile of bank loans that have gone bad. But it will be a while before these fixes begin to show results.

But India cannot wait for these solutions to kick in. Every year, the number of job seekers rises, making it difficult to claim that its youthful population is an economic asset. In the absence of jobs and investment, this is at best a rotting asset, or, more likely, a social time bomb that can implode if it does not get the right opportunities. Overcoming this requires, at the very minimum, continuing Foreign Direct Investment (FDI) in different sectors of the Indian economy. Modi has been alive to this challenge and his foreign visits across diverse countries (such as those in the Middle East, Japan and the US) have been to create conditions for greater inflows of investment. It has worked to an extent, but more money is always welcome.

One could always say that a single visit to Davos won’t change that. The problem with this outlook—found mostly among NGOs, leftist academics and other assorted do-gooders— is that it betrays a lack of understanding of how investments work. At any time, potential investors are keen to hear the ideas of leaders from emerging countries. In informal settings, the questions they can ask, and importantly the answers that leaders like Modi can provide, are an important signal for companies and individuals seeking to enter Indian markets. At the level of ideas, it is even more important to convey that India remains an open country. With a wave of populism washing Western countries and many established markets, positive signals from India can go a long way to keep the country an attractive destination. There’s no better way to convey this than by the Prime Minister himself saying so. To join hands with anti-globalisers would be a disaster for India’s economic fortunes. Fortunately, those in control don’t think that way.